ACC 843 Value Chain Accounting and Analytics Assignment- Michigan State University.
Question 1
Lockheed Martin has been approached by the Department of Defense to prepare a bid for
Starlight rocket launchers.
Question I. Use learning curve theory and prepare a cost bid for 15 Starlight rocket launchersgiven the following data for the prototype (i.e., the model). You must prepare a separate bidusing (a) the cumulative average-time learning model, and (b) the individual unit-time learningmodel.
The prototype took 2,000 hours to produce and has the following cost information. The prototype can be sold as a part of the contract.
Directmaterials $600,000
Direct labor (2,000 hours @ $200perhour) $400,000
Variable direct manufacturing overhead (2,000 hours @ $100) $200,000
Other manufacturing overhead (20% ofdirectcost) $240,000
(i.e., 20% of direct materials, direct labor, and variable overhead)
Total Cost $1,440,000
In preparing each bid, integrate the learning curve into the bid by relying on the following historical data for the production of 16 Sky rocket launchers, which was the previous generation of the Starlight launchers.
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Unit Number
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Labor Hours
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1
|
3900
|
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2
|
3650
|
|
3
|
3100
|
|
4
|
2750
|
|
5
|
2450
|
|
6
|
2475
|
|
7
|
2200
|
|
8
|
2100
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|
9
|
2150
|
|
10
|
2100
|
|
11
|
1900
|
|
12
|
1850
|
|
13
|
1775
|
|
14
|
1800
|
|
15
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1750
|
|
16
|
1700
|
Question II. Prepare another bid that has no learning. Comment on the difference. Discuss the implications of these results for the company with respect to its laborpolicy.
(Use Excel Dataset labeled "Marks-and-Spencer-International-Data" for this question)
MSI, a department store chain, is trying to upgrade its customer service in order to compete with a rival chain which has recently moved into its territory and has a very strong customer-service reputation. MSI management knows that customer service is currently high in some of its stores but low in others. On average, its current reputation for service is less than outstanding. In order to build support for better customer service throughout the chain, MSI management decides to analyze existing data to show how much more profitable its own high-service stores are than its low-service stores.
MSI has created a customer-service indicator which is composed of a combination of ratings from "mystery shoppers" and surveys of customers by an independent organization. The scale for this indicator ranges from 1 to 60, which is a continuous variable with higher numbers indicating higher quality. MSI also has data on a number of factors that are likely to influence store profits. These include store size, rural versus urban location, manager performance rating (1 to 5 scale, where 5 is high), per capita income in the surrounding region (low to high ranges, summarized on a 1 to 5 scale, where 5 is high), non-managerial employee skill index (a measurement the Human Resources department has created, which ranges from 1 to 20; high numbers are better) and age of the store (which implies how long it has been inoperation).
Based on regression analysis, what can you tell MSI about customer service? For example:
A. How big an effect on profit does customer service have?
B. Does customer service have a bigger effect on profits in some portions of the customer- service range than others? That is does the effect of customer service on profit have diminishing or increasingreturns?
C. Is the effect of customer service on profit similar for large versus smallstores?
D. Is the effect of customer service on profit similar for urban versus ruralstores?
E. What are the factors that influence the level of customer-servicequality?
Question III.
PART 1
The RBC case describes two methods for computing the lifetime value of a customer. One method (Markov Chain and Transition matrices) takes into account the expected likelihood thata customer holding a particular product portfolio will migrate to another portfolio or leave the bank in thefuture.
Assume that RBC has only two products: Car Loan (CL) and Credit Card (CC). The annual profitability for each of the two products is (-$100) (i.e., $100 loss) for CL and +$1000 for CC.
RBC has made the following observation for customers in the 25-30 year segment:
o If they have a car loan at the end of a given year, the probability of also acquiring acredit card during the following year is 50%
o The probability of losing even this one product during the following year is20%
o The probability that the customer retains only the car loan during the following yearis 20%
o The probability that the customer drops the car loan but acquires a credit card duringthe following year is10%
Similar observations can be made for individuals who begin the year with only a credit card, both products, or neither product. These observations are summarized in the following matrix of probabilities.
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Product mix in year t+1
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Product mix in year t
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CL
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CC
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CL+CC
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None
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CL
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0.2
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0.1
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0.5
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0.2
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CC
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0.1
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0.5
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0.2
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0.2
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CL+CC
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0.1
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|
0.1
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0.7
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0.1
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None
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0
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0
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0
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|
1
|
Answer the following questions using a 8% discount rate:
A. Consider a customer who has only a credit card in year t. Whatis
a. The expected profit generated by this customer in yeart+1?
b. The present value of expected profits from this customer for bothyears combined?
B. Consider a customer who has both a car loan and credit card in time t. Whatis
a. The expected profit generated by this customer in yeart+1?
b. The present value of expected profits from this customer for bothyears combined?
C. Discuss how these results will be useful for you to design a market strategy. Be specific in your suggestions and provide concretesuggestions.
PART 2
You are the manager of a bank. You need to decide whether to approve a 10-year loan application from a 25 year old student to finance her MBA. The loan will yield a loss of $250 per year to the bank for the duration of the loan. After 10 years, the student will likely buy other products and therefore she will yield a profit of $500 per year until she is 65. After age 65, she will yield a profit of $1,000 per year until she is 85, when she will stop being a customer. The likelihood that she stops being a customer after she repays her MBA loan is 2% each year. The discount rate that the bank uses is 7% per year.
Would you approve the loan? Please explain with numerical support.
Question IV.
We have discussed many cases in this course where we classify the type of data analytics problem as either descriptive, predictive, or prescriptive. For each type of data analytics (descriptive, predictive, prescriptive) select one case from the course and discuss why it belongs to the particular analytics category (thus, you will have three cases to select). Your discussion should (a) provide relevant case details from the cases chosen, (b) make use of the associated readings for the case, and (c) justification for the classification.
Format your assignment according to the following formatting requirements:
(1) The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
(2) The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
(3) Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.
Attachment:- MSI-Store-Data.rar