Operations Management Homework - 843 Words

1. What is the best way to increase value the most, given the following information for one customer? Base Case: Perceived benefits $50 and Price $10.00 Improvement Option A: Perceived benefits $65 and Price $13.00 Improvement Option B: Perceived benefits $65 and Price $12.50 Improvement Option C: Perceived benefits $60 and Price $12.50 We derive the following (using the formula, value = perceived benefits / price (cost) to the customer): * Base Case: value = (50/10) = 5 * Option A: value = (65/13) = 5 * Option B: value = (65/12.50) = 5.20 * Option C: value = (60/12.50) = 4.80 The option B is the best way to increase value the most (but the cost to the customer is higher, and the perceived benefit as well).†¦show more content†¦Use productivity arguments to recommend whether or not to change the current system. †¨ Using the formula: = 50 / 1 = 50 = 90 / 3 = 30 It is better not to change the system, since a single worker can handle 50 cars per hour (taking orders, assembling them and acting as a cashier), on the other hand, 3 workers (one taking orders, the second assembling them, and the third acting as cashier) would handle 30 cars each. 10. What is the average value of a loyal customer (VLC) in a target market segment if the average purchase price is $75 per visit, the frequency of repurchase is six times per year, the contribution margin is 10 percent, and the average customer defection rate is 25 percent? Using the formula: VLC = (P) (RF) (CM) (BLC) VLC = (75) (6) (10%) (1/0.25) VLC = $180.00 The average value of a loyal customer (VLC) is $180.00. 12. What is the average defection rate for grocery store shoppers in a local area of a large city if customers spend $60 per visit, customers shop 52 weeks per year, the grocery store has a 12 percent gross mar- gin, and the value of a loyal customer is estimated at $2,750 per year? Using the formula: VLC = (P) (RF) (CM) (BLC) 2,750 = (60) (52) (12%) (1/DF) 2,750 = 374.4 (1/DF) 7.345085 = (1/DF) DF = 1/7.345085 DF = 14% The average defection rate for grocery store shoppers isShow MoreRelatedOperations Management Homework Chapter 3 Essay1333 Words   |  6 PagesHomework 1 – GMGT 590 Q 3.5    | Step 1: Cut | Step 2: Put Grilled Stuff on Bagel | Step 3: Veggies on Bagel | Step 4: Cream Cheese | Step 5: Wrap | I | 1 | 1 | 1 | 1 | 1 | T | 3 min | 10 min | 5 min | 4 min | 2 min | R | 0.333333333 | 0.1 | 0.2 | 0.25 | 0.5 | % | 100% | 16.67% | 77.78% | 22.20% | 100% | ADJ R | 0.333333333 | .5999 | 0.2571 | 1.126 | 0.5 | | | | | | | Total Bagel | 180 | 100.00% | | | | Grilled Veggie | 30 | 16.67% | | | | Veggie Only |Read MoreGoods Services1178 Words   |  5 PagesHomework #2: Goods, Services, and Operations Management Written By: Tamara Ellis Prof. Samuel A. Garwon MGMT 480 – 002 March 6, 2013 1. 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