Question One

Management of AG Travel and Tour has identified two groups of individuals that would be interested in the vacation package consisting of room and board and/or entertainment. The maximum amount that group 1 is willing to pay for room and board is GHC 2500 and for entertainment is GHC 500. For group 2, the maximum amount they are willing to pay for room and board is GHC 1800 and for entertainment is GHC 750. Although AG Travel and Tour is not able to identify members of either group, it does know that each group values the components of the package differently. Assuming there are an equal number of members in each group and that the total membership in each group is a single individual. If the marginal cost of providing the service (room and board and/or entertainment) to each group is GHC 1000.

i. How much will the hotel charge members of each group for the vacation package if it could identify the members in each group?

ii. How much will the profit for AG Travel and Tour be?

iii. Since AG Travel and Tour is not able to identify members of each group, what price should it charge for each product?

iv. What will be the profit for AG Travel and Tour in the case of (iii) above?

v. If AG Travel and Tour wants to charge a package price, what is the highest price it can charge?

vi. What profit will AG Travel and Tour make if it charges the package price found in (v) above?

Management of AG Travel and Tour has identified two groups of individuals that would be interested in the vacation package consisting of room and board and/or entertainment. The maximum amount that group 1 is willing to pay for room and board is GHC 2500 and for entertainment is GHC 500. For group 2, the maximum amount they are willing to pay for room and board is GHC 1800 and for entertainment is GHC 750. Although AG Travel and Tour is not able to identify members of either group, it does know that each group values the components of the package differently. Assuming there are an equal number of members in each group and that the total membership in each group is a single individual. If the marginal cost of providing the service (room and board and/or entertainment) to each group is GHC 1000.

i. How much will the hotel charge members of each group for the vacation package if it could identify the members in each group?

ii. How much will the profit for AG Travel and Tour be?

iii. Since AG Travel and Tour is not able to identify members of each group, what price should it charge for each product?

iv. What will be the profit for AG Travel and Tour in the case of (iii) above?

v. If AG Travel and Tour wants to charge a package price, what is the highest price it can charge?

vi. What profit will AG Travel and Tour make if it charges the package price found in (v) above?

Last year, a sailboard company produced two types of boards: a regular board for multi-purpose sailing; and, a special trick board used by experts for competitions. The regular board sells for $750 and the competition board sells for $1,350. The variable production costs are $250 and $400 respectively, and the company has $400,000 in fixed costs overall. Marketing staff have determined that the company should specialize in the competition boards only, and sell the regular boards, if at all, under a different brand name. Last year the company made a profit, selling twice as many regular boards as competition boards, resulting in a fixed cost allocation of $5.00 per board. It takes 6 hours of direct labour to make a regular board and 12 hours to make a competition board. The company worked at full capacity of 19,500 direct labour hours last year.

Based on the above information only, which product or mix of products, should the company choose? Assume that any and all production can be sold.

Management of AG Travel and Tour has identified two groups of individuals that would be interested in the vacation package consisting of room and board and/or entertainment. The maximum amount that group 1 is willing to pay for room and board is GHC 2500 and for entertainment is GHC 500. For group 2, the maximum amount they are willing to pay for room and board is GHC 1800 and for entertainment is GHC 750. Although AG Travel and Tour is not able to identify members of either group, it does know that each group values the components of the package differently. Assuming there are an equal number of members in each group and that the total membership in each group is a single individual. If the marginal cost of providing the service (room and board and/or entertainment) to each group is GHC 1000. i. How much will the hotel charge members of each group for the vacation package if it could identify the members in each group ii. How much will the profit for AG Travel and Tour be? iii. Since AG Travel and Tour is not able to identify members of each group, what price should it charge for each product iv. What will be the profit for AG Travel and Tour in the case of (iii) above v. If AG Travel and Tour wants to charge a package price, what is the highest price it can charge? vi. What profit will AG Travel and Tour make if it charges the package price found in (v) above

Management of AG Travel and Tour has identified two groups of individuals that would be interested in the vacation package consisting of room and board and/or entertainment. The maximum amount that group 1 is willing to pay for room and board is GHC 2500 and for entertainment is GHC 500. For group 2, the maximum amount they are willing to pay for room and board is GHC 1800 and for entertainment is GHC 750. Although AG Travel and Tour is not able to identify members of either group, it does know that each group values the components of the package differently. Assuming there are an equal number of members in each group and that the total membership in each group is a single individual. If the marginal cost of providing the service (room and board and/or entertainment) to each group is GHC 1000.
i. How much will the hotel charge members of each group for the vacation package if it could identify the members in each group?
ii. How much will the profit for AG Travel and Tour be?
iii. Since AG Travel and Tour is not able to identify members of each group, what price should it charge for each product?
iv. What will be the profit for AG Travel and Tour in the case of (iii) above?

v. If AG Travel and Tour wants to charge a package price, what is the highest price it can charge?
vi. What profit will AG Travel and Tour make if it charges the package price found in (v) above?

Martin Enterprises needs someone to supply it with 136,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost you $965,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. You estimate that, in five years, this equipment can be salvaged for $118,000. Your fixed production costs will be $540,000 per year, and your variable production costs should be $18.45 per carton. You also need an initial investment in net working capital of $112,000. Assume your tax rate is 21 percent and you require a return of 11 percent on your investment. a. Assuming that the price per carton is $28.20, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Assuming that the price per carton is $28.20, find the quantity of cartons per year you can supply and still break even. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c. Assuming that the price per carton is $28.20, find the highest level of fixed costs you could afford each year and still break even.

‘Lady tasting tea’ is a randomized experiment devised by Ronald Fisher and reported in his book The Design of Experiments (1935). The lady in question (Muriel Bristol) claimed that she can tell whether the tea or the milk was added first to a cup. Fisher proposed to give her eight cups, four of each variety, in random order. One could then ask what the probability was for her getting the specific number of cups she identified correct, but just by chance. In this problem we are going to modify and simulate ‘The Lady tasting tea’ experiment. Suppose that you are going to randomly selected a student and conduct the similar experiment; 10 cups (instead of 8) of tea of which some have milk added first and others have milk added last. We are going to assume that this student, unlike Ms Bristol, does not have the skill to tell if the milk was added first or last.

1. (Lady tasting tea Problem) What is the probability that the student correctly guesses if a given cup of tea has milk added first or last?

2. (Lady tasting tea Problem) For this student, what is the expected number of correct guesses out of 10? What about incorrect guesses?

3. (Lady tasting tea Problem) Would you be surprised if the student guesses 6 out of 10 cups correctly (60% correct rate)? Would you conclude that this student has the skill to tell if the milk was added first or last? Or would you conclude that he/she was just “lucky”?

4. (Lady tasting tea Problem) Suppose that you prepare 100 cups of tea instead of 10. Would you be surprised if the student guesses 60 out of 100 cups correctly (still 60% correction rate)? Would you conclude that this student has the skill to tell if the milk was added first or last? Or would you conclude that he/she was just “lucky”?

Use the Happy 1 variable for this exercise. Suppose someone claims the population mean is 55, and the standard deviation is 10.

PART 1 - For now, assume both of the claims about the population are correct.

1a. Given the assumed pop. mean and st.dev, calculate the probability of observing a value above the number for your first data point in the data set. (which is 36)

1b. Suppose you collected 8 new data points in a new sample. Calculate the probability that the mean of these 8 new data points is above the number for your first data point in your file.

1c. If this is a normally distributed variable, above what value should you find 70% of data points? How many of the values from your data set are above this value?

1d. If this is a normally distributed variable, between what two numbers (centered around the assumed mean) should you find 68% of data points? What percentage of your data points are between these numbers?

1e. Think about your answers to 1c and 1d. Does this variable appear to be normally distributed with this mean and standard deviation?

QUESTION 25

1. In the table below, find Jim's score on the Computer Lab Project.

   What is Jim's percentile rank on this project? Report as a whole number (e.g., 75).

   Student	Computer Lab Project Score	Major	Comfort with Computer (Scale: 1 = low, 2 = medium, 3 = high)
   Mary	19	Nursing	1
   Susan	18	Social Work	2
   Brad	22	Physical Therapy	3
   Betty	22	Nursing	3
   John	27	Nursing	2
   Larry	21	Nursing	3
   Jim	29	Physical Therapy	1
   Martha	30	Physical Therapy	3

QUESTION 26

1. In the table below, find the scores on the Computer Lab Project.

   What is the probability that Jim could have gotten a score that would be equal to or greater than a Z of 1.5 (Z≥1.5)?

   Report as a proportion with 2 decimals (e.g., 0.33).

   Student	Computer Lab Project Score	Major	Comfort with Computer (Scale: 1 = low, 2 = medium, 3 = high)
   Mary	19	Nursing	1
   Susan	18	Social Work	2
   Brad	22	Physical Therapy	3
   Betty	22	Nursing	3
   John	27	Nursing	2
   Larry	21	Nursing	3
   Jim	29	Physical Therapy	1
   Martha	30	Physical Therapy	3

QUESTION 27

1. In the table below, find the scores on the Computer Lab Project.

   Compute the probability of getting a z-score equal to or less than +1.64 (Z≤+1.64) and express it as a percentile.

   Report as a whole number (e.g., 75).

   Student	Computer Lab Project Score	Major	Comfort with Computer (Scale: 1 = low, 2 = medium, 3 = high)
   Mary	19	Nursing	1
   Susan	18	Social Work	2
   Brad	22	Physical Therapy	3
   Betty	22	Nursing	3
   John	27	Nursing	2
   Larry	21	Nursing	3
   Jim	29	Physical Therapy	1
   Martha	30	Physical Therapy	3

Question 18

A large hospital uses a certain intravenous solution that it maintains in inventory. Assume the hospital uses reorder point method to control the inventory of this item. Pertinent data about this item are as follows:

------------------------------------------------------------

Forecast of demand^a = 1,000 units per week

Forecast error^a, std. dev. =100 units per week

Lead time = 4 weeks

Carrying cost = 25 % per year

Purchase price, delivered = $52 per unit

Replenishment order cost = $20 per order

Stockout cost = $10 per unit

In-stock Probability during the lead time =90%

^a Normally distributed

------------------------------------------------------------

Due to possible rounding effect, please pick the closest number in the following options.

Question 19

If the hospital orders 400 units each time, what’s the total annual costs (holding cost + ordering cost + stock-out cost) excluding purchasing costs?

Question 19 options:

Use the following information to answer questions 17-20.

A large hospital uses a certain intravenous solution that it maintains in inventory. Assume the hospital uses reorder point method to control the inventory of this item. Pertinent data about this item are as follows:

------------------------------------------------------------

Forecast of demand^a = 1,000 units per week

Forecast error^a, std. dev. =100 units per week

Lead time = 4 weeks

Carrying cost = 25 % per year

Purchase price, delivered = $52 per unit

Replenishment order cost = $20 per order

Stockout cost = $10 per unit

In-stock Probability during the lead time =90%

^a Normally distributed

------------------------------------------------------------

Due to possible rounding effect, please pick the closest number in the following options.

Question 20

If the lead time is normally distributed with a mean of 4 weeks and a standard deviation of 0.5 weeks, what’s the reorder point?

Question 20 options: