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BUAD 311 HW #6 - Rezone Not rezoned-\$2 mil 600*\$4000 =...

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BUAD 311 Operations Management Homework 6: Forecasting with Seasonality and Trend, Decision Tree, Revenue Management 1 . a) Mean demand (Q1-4) = (160+195+150+140)/4 = 161.25 Mean deamand (Q5-8) = (215+240+205+190)/4 = 212.5 b) I t = A t /mean Quarter Sales Seasonality Indices 1 160 160/161.25 = 0.99 2 195 195/161.25 = 1.21 3 150 150/161.25 = 0.93 4 140 140/161/25 = 0.87 5 215 215/212.5 = 1.01 6 240 240/212.5 = 1.13 7 205 205/212.5 = 0.96 8 190 190/212.5 = 0.89 c) I 1 = 0.5(0.99) + 0.5(1.01) = 1 I 2 = 0.5(1.21) + 0.5(1.13) = 1.17 I 3 = 0.5(0.93) + 0.5(0.96) = 0.945 I 4 = 0.5(0.87) + 0.5(0.89) = 0.88 d) Trend estimator, T = (212.5-161.25)/4 = 12.8125 Level estimator = 212.5 Forecast F 9 = (212.5+12.8125) * 1 = 225.3125 2. The best solution if the land is rezoned would be to build a shopping center and if the land isn’t rezoned, the only option would be to build the 600 homes. The expected net

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Unformatted text preview: Rezone Not rezoned-\$2 mil + 600*\$4000 = \$400,000 Shopping center 1500 apartments-\$2mil – \$1mil + \$4mil = \$1mil -\$2mil – \$1mil + \$5mil = \$2mil Sell to insurance company Sell to chain Sell for \$3000 Sell for \$2000-\$2mil – \$1mil + 1500*\$3000= \$1.5mil -\$2mil – \$1mil+ 1500*\$2000= \$0 \$0.9mil \$1.3mil profit would be \$940,000 [0.6(\$1.3mil) + 0.4(\$400,000) = \$940,000]. 3. d(p) = 5000exp(-0.002p) Revenue = Demand*Price R(p) = 5000exp(-0.002p) * p R’(p) = 0 -0.002(5000)p*exp(-0.002p) + 5000exp(-0.002p) = 0 [5000exp(-0.002p)](1-0.002p) = 0 p = 500 since 5000exp(-0.002p) has no solution Revenue is maximized when the price is \$500....
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BUAD 311 HW #6 - Rezone Not rezoned-\$2 mil 600*\$4000 =...

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