DSCI6830 Demand and Revenue Management
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
DSCI6830 Demand and Revenue Management
DSCI6830 (Fall 2017) – WEEK 3 & 5 ASSIGNMENT #1 (10% of course grade)
Demand and Revenue Management
Name ______________________
READ “DRM_Week3_ONLINE_Notes.doc” in this same folder.
ANSWER the questions and e-mail to me by end-of-day 10/8/2017. (Late submissions will be penalized.)
RENAME this file as “lastname_firstname_Week_3and5.doc” but with your name, of course!
NOTE: This assignment mostly covers material from Chapters 2-3 of PRO and Chapters 3-5 of DM, but may use concepts from earlier material as well.
This is a Word document, so just add space as needed between questions, but leave the original questions!
If you have any doubt, show work or explain for partial credit, or else the answers will be graded as “all or nothing”.
Hint: Clever use of Excel might make some answers much easier to answer!
Challenging “Bonus” questions are included to help you earn extra points!
Maximum of 100 points on assignment
Tactical Questions:
- (10 pts total) Chapter 2, Problem 1 on page 36 of PRO (“Brain and Company…”)
- (5pt) see text
- (5pt) see text
- (10-15 pts total) If price elasticity of demand (ϵ) is 3,
- (5pt) How does demand change if the price is increased 1%
- (5pt) How does demand change if the price is decreased 5%
- BONUS (5pt) How does demand change if the price is decreased 50%
- (15-20 pts total) The Basic PRO Problem. Dizzy Toys © has created a new toy, RoboWoman™, loved by girls and boys alike, that costs $5 to make. They are not sure what price they should charge for this awesome new toy, but they want to maximize profits. Initial market research has hinted at a linear PRF of d(p)=14000-700p.
HINT: See slides 59-60 of Week 3 ONLINE slides!
- (5 pts) What price (p) maximizes total contribution (TC)?
- (5 pts) What is the demand at the optimal price (p*)?
- (5 pts) What is the TC at p*?
- BONUS (5 pts) What is the satiating price (P)?
- (20-30 pts total) Pricing with Competition: The Multinomial Logit (MNL). Consider Example 3.7 on page 57 of PRO. It is relatively easy for a company to change its price, but difficult to change its price elasticity since this is based on factors such as brand reputation and customer loyalty. Re-create the chart from the example in Excel using Equation 3.13 (Note that I divided price by 1000 to keep the numbers reasonable and prevent rounding errors in Excel). You should get a result like this:
Model Price bj e^(-bipi/1000) Market Share (μi(p)) Audio Two 400 2.5 0.368 30.8% Koshiba 650 3.077 0.135 11.3% Takata and Fuji 500 2.4 0.301 25.3% Soundmaster 750 2.4 0.165 13.9% Cacophonia 1200 1.25 0.223 18.7% 1.193 100.0% Assuming elasticity (bj) does not change (which is of course a BIG assumption for a large price change!), what is Takata and Fuji’s market share if it…
- (5pt) decreases its price to $400?
- (5pt) increases the price to $625?
- (10pt) At $400, Takata and Fuji is at the same price point as Audio Two. Assuming their costs are exactly the same, which company is in the “better” position? Why? (Hint: Use more than just the market share to explain!)
- BONUS (10pts) If it costs $350 to make an item (and elasticities don’t change), find the price that maximizes Takata and Fuji’s Total Contribution.
- (20-30 pts total) The Logit Price-Response Function. (Based on Problem 3 on page 70 of PRO) An auto manufacturer can manufacture compact cars for an incremental cost of $5,000 apiece. She faces a logit price-response function for sales in the next month (see equation 3.11 on page 53), with parameters C=40,000, b=0.0005, and market price ṕ=$12,000.
- (5) Keeping the price as variable p, what is the unit margin (contribution) from each additional sale?
- (5) What is the price-response function, d(p), for this manufacturer?
- (5) At a price of $10,000, what is the demand?
- (5) Roughly, what is the shape of the willingness-to-pay distribution?
- BONUS (5 pts) What price maximizes Total Contribution?
- BONUS (5 pts) What price maximizes Revenue?
Strategy Questions:
- (10 pts total) Accurate demand plans are crucial for a company. They are used by Finance to predict revenues and cash flows. They are used by Operations to help determine long-term capacity and short-term scheduling. How can Sales and Marketing (the organization that should be in charge of forming the demand plan) be held accountable for:
- (5pts) Underestimating the demand
- (5pts) Overestimating the demand
- (5 pts) Explain the roles of demand plan “dashboards” and the benefits they offer.
- (10 pts) What is the goal of “demand management” and “integrated business management”? What 4 repeating steps are used to execute a “proper” DM process?
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. GET THIS PROJECT NOW BY CLICKING ON THIS LINK TO PLACE THE ORDER
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