Posted: March 11th, 2023
MAB_CS1
MAB-CS1
Imagine you are a business analytics employee at BAT Car Company. The president and CEO of BAT have tasked you with providing them with a data plan addressing expansion of BAT’s production business into Frankfurt, Germany, on a $40 million Model Z plant. This $40 million, which encompasses all fixed costs, the BAT CEO plans to apportion equally (25%) each) among the four types of vehicles the Model Z plant will manufacture.
All economic and environmental impact studies have been approved. The size of the plant is predicted to be 420 soccer fields in size (a soccer field is 100 yards wide by 130 yards long). The car sales are expected to be: $30,000 per sedan; $50,000 per sports model; $20,000 per small cargo van; and $40,000 per passenger minivan. It will create 10,000 jobs for Frankfurt and the surrounding areas.
There have been some issues with protestors regarding the building of an automotive plant that destroys forestland valued at $350 million. There has been some rumbling regarding a group called “Save The Forest” that could implement a cease all actions lawsuit against BAT. Research has shown that previous lawsuits and environmental impact has led to years of litigation and legal fees. The variable costs for the first year’s operation look to be $20,000 per sedan; $40,000 per sports model; $10,000 per small cargo van; and $25,000 per passenger minivan. Sales are expected to be: 40,000 sedans; 5,000 sports cars; 2,000 cargo vans; and 12,000 minivans.
Prepare a brief report for the president and CEO of BAT Car Company. Your report should include the following elements:
· an introduction section that describes how the quantitative analysis approach can be applied to this situation;
· BAT’s profit formula results;
· BAT’s break-even point for each vehicle type; and
· your final recommendation on actions to take. (This section should convey to the CEO if the expansion of the production plant is profitable to BAT over the long haul, as well as how to deal with any possible litigation.)
Your final report must be at least three pages in length, and you must show all of your computations (the
Unit I Practice Problem Activity
will help with this).You can also view a
PDF of the Unit I Practice Problem Activity
.You should use at least two academic sources in your report, one of which may be your textbook. Adhere to APA Style when constructing this assignment, including in-text citations and references for all sources that are used. Please note that no abstract is needed.
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Page 1 of 12
Slide 1 - Title Slide
Slide notes
Text Captions
Unit I Practice Problems
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Slide 2 - Instructions
Slide notes
Text CaptionsThe following slides contain practice problems from page 18 in the textbook. Try to solve the problems, then watch the video solution to check your work. To play the video, simply click on the video and it will open in a new tab.
Instructions
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Slide 3 - Question 1-16
Slide notes Text CaptionsProblem: Ray Bond sells handcrafted yard decorations at county fairs. The variable cost to make these is $20 each, and he sells them for $50. The cost to rent a booth at the fair is $150. How many of these must Ray sell to break even?
Question 1-16
Solution:
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Slide 4 - Question 1-17
Slide notes Text CaptionsProblem: Ray Bond, from Problem 1-16, is trying to find a new supplier that will reduce his variable cost of production to $15 per unit. If he was successful in reducing this cost, what would the break-even point be?
Question 1-17
Solution:
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Slide 5 - Question 1-18
Slide notes Text CaptionsProblem: Katherine D’Ann is planning to finance her college education by selling programs at
the football games for State University. There is a fixed cost of $400 for printing these
programs, and the variable cost is $3. There is also a $1,000 fee that is paid to the university for
the right to sell these programs. If Katherine was able to sell programs for $5 each, how many
would she have to sell in order to break even?
Question 1-18
Solution: Adobe Captivate Wednesday, April 27, 2022Page 6 of 12
Adobe Captivate Wednesday, April 27, 2022Page 7 of 12
Slide 6 - Question 1-19
Slide notes Text CaptionsProblem: Katherine D’Ann, from Problem 1-18, has become concerned that sales may
fall, as the team is on a terrible losing streak and attendance has fallen off. In fact,
Katherine believes that she will sell only 500 programs for the next game. If it was
possible to raise the selling price of the program and still sell 500, what would the price
have to be for Katherine to break even by selling 500?
Question 1-19
Solution: Adobe Captivate Wednesday, April 27, 2022Page 8 of 12
Adobe Captivate Wednesday, April 27, 2022Page 9 of 12
Slide 7 - Question 1-20
Slide notes Text CaptionsProblem: Farris Billiard Supply sells all types of billiard equipment and is considering manufacturing its
own brand of pool cues. Mysti Farris, the production manager, is currenlty investigating the production
of a standard house pool cue that should be very popular. Upon analyzing the costs, Mysti determines
that the materials and labor cost for each cue is $24, and the fixed cost that must be covered is $2,400
per week. With a selling price of $40 each, how many pool cues must be sold to break even? What
would the total revenue be at this break-even point?
Question 1-20
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Solution: Adobe Captivate Wednesday, April 27, 2022Page 11 of 12
Slide 8 - End Slide
Slide notes Text CaptionsUnit I Practice Problems
You have reached the end of the Unit I practice problems. Click the Restart button to return to the beginning if you need further review. Otherwise, you may close your browser window to exit.
Title slide image reference:
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Baranau, D. (n.d.). ID 162189502. Dreamstime. https://www.dreamstime.com/budget-data-people-vector-business-analysis-person-concept-
illustration-financial-account-statistic-graph-management-chart-report-image162189502
LDR 5301, Methods of Analysis for Business Operations 1
1. Differentiate the steps of the quantitative analysis approach. 1.1 Explain the quantitative analysis approach. 1.2 Perform a profit analysis and breakeven analysis. 1.3 Determine an action plan for a company using the quantitative analysis approach.
Course/Unit
Learning Outcomes Learning Activity
1.1
1.2
Unit Lesson Chapter 1 Video Segment: Breakeven Analysis Unit I Case Study
1.3 Unit Lesson Chapter 1 Unit I Case Study
clips 1: Accounting, forecasting, and breakeve. Films on Demand. https://libraryresources.columbiasouthern.edu/login?auth=CAS&url=https://fod.infobase.com/PortalPl aylists.aspx?wID=273866&xtid=128753&loid=450485
The transcript for this video can be found by clicking on “Transcript” in the gray bar to the right of the video in the Films on Demand database. Unit Lesson Today’s business world is globally connected. From Canada to Mexico, and from China to the United States, each country is connected to others in many ways. Imagine the business decisions that are made on a daily basis from every type of organization—finance, manufacturing, video production, automobile production, retail, fashion, gambling, and food services. Literally, there are hundreds of thousands of decisions that must be made every day in these organizations regarding cost analyses, debt analyses, return-on-investment analyses, breakeven analyses, trend analyses, correlations, consumer preferences and change to products, and market share analyses. Also, think about the entertainment industry with regard to professional and college sports (football, basketball, hockey, soccer, and more). Both professional and college sports use business analytics from a business standpoint and as a strategy application of the game. Data are recorded regarding where points are
UNIT I STUDY GUIDE Introduction to Quantitative Analysis
https://libraryresources.columbiasouthern.edu/login?auth=CAS&url=https://fod.infobase.com/PortalPlaylists.aspx?wID=273866&xtid=128753&loid=450485LDR 5301, Methods of Analysis for Business Operations 2
UNIT x STUDY GUIDE Title
scored, the distance from which they were scored, what play worked in what given defensive or offensive situation. There is much effort put into major league and college sports with data gathering and analysis. Think about this application to minor league baseball: two scouts are sitting behind home plate, each with a notebook, pencil, and speed gun. They record the speed of each pitch, the call by the umpire, and if there are runners in position. Why? They are gathering data for future utilization of that pitcher by the parent major league team. So, where do leaders and executives begin? It starts with the comprehension of managerial science. They can begin with the application of quantitative analysis, as mentioned above, with qualitative analysis, which includes things such as weather, federal and state legislation, and economic disruptors that create positive change with new product and technological developments. All of these operations require data and information. This is referred to as the application of management science. Data drive the decision-making process because there is no room for guesswork or emotions to take part in quantitative analysis (Render et al., 2018). When corporate leaders look at data, it is usually in the form of numbers with regard to cost, revenue generated, profit, and market share. To have a good grasp on decision-making, leaders use a business analytics approach. Render et al. (2018) have broken down this process into three major areas:
• descriptive analytics: statistical methods mean, standard deviations, mode; • predictive analytics: decision trees, regression models, forecasting, project scheduling, and waiting
line models such as McDonald’s, Chick-fil-A, and bank drive-through operations; and • prescriptive analytics: inventory modeling, transportation modeling.
So, what do they do? What is their purpose? How do they help a business leader use both quantitative and qualitative analysis? Descriptive analytics involves the study and consolidation of historical data for a business and industry (Render et al., 2018). An example of this would be in the automotive industry. How many cars were sold last year? What models sold best? What were the regional and world economic positions (growth, recession)?
Predictive analytics relies on forecasting to determine future outcomes based on patterns from past data (Render et al., 2018). A few examples of predictive analytics are business operations in marketing campaigns conducted by determining customer purchase patterns based on billboard ads, television ads, and radio ads. In addition, predictive analysis can be used to better manage a company’s inventory based on seasonality and weather changes. One more example is insurance companies’ analyses of data when predicting insurance rates for their drivers based on past driving records, age, accidents, and citations. The final analytic is prescriptive. According to Render et al. (2018), this analytic focuses on using optimization models such as linear programming, transportation modeling, and inventory control through economic order quantities. The next time you are
driving on the interstate highway in your area or on a main traffic route in your city, look at the trucks that are
LDR 5301, Methods of Analysis for Business Operations 3
UNIT x STUDY GUIDE Titleon the road. You will likely see a Walmart, Target, Publix, or other such truck. Companies use transportation modeling for deliveries to maximize time with route and fuel consumption savings. A great example of prescriptive analytics is from Google’s self-driving, autonomous car called the Waymo. John Krafcik, Waymo CEO, began work on Waymo in 2009 under the ownership of Google (Waymo, n.d.; Wakabayashi, 2020). According to Wakabayashi (2020), Google spun out the project in 2016, after vehicles were driven more than 20 million miles on public roads and more than 10 billion miles in computer simulation since 2009. Given Google’s work on this project, other companies have followed their lead because that is what it takes in business decision-making. Decision makers use and employ business analytics as described above to comprehend the needs of the consumer and the market. This is done through data gathering, statistics, and models that assist in forecasting the future needs and sales. Now, all the big names in cars are engaged in this technological development of designing autonomous cars for the consumer. Your exposure to the three types of business analytics will expand your perspective on what types of tools and formulas are used for each analytic, thereby, helping you make a better decision on what quantitative technique works best. Now that you have an understanding of what business analytics are and how they are used, let’s see how they are integrated into the quantitative analysis approach. Render et al. (2018) do a great job of providing a quality diagram on page 3 in the textbook. If you have taken any courses in business management, the quantitative analysis approach closely follows the business management decision-making model. Let’s step through Render et al.’s (2018) quantitative analysis approach. Defining the Problem This could be very easy; then again, it could be difficult because many problems may exist. Leaders and managers need to focus on the operation at hand. What is causing the disruption, lack of sales, or delays? Developing the Model Simply put, this is determining whether to use a mathematical model for solving the problem (more than likely yes), or it could be a physical model on building a bridge. Regardless of the type, there will be data, variables, and parameters that will be measured. Acquiring the Data It is now time to gather data that pertain to the problem at hand. Depending on the problem’s breadth and depth, the data gathering could be easy or difficult. There is no set number of data points; it depends on the problem to be solved. Developing a Solution You have defined your problem, you have determined the correct model to use, and you have gathered your data. You now load the data into the equation or computer algorithm selected and let the program crunch the numbers for you. Once the data application is completed, leaders, managers, and executives will review the data, determine the parameters, and do a few things:
• accept the data, • reject the data, or • tweak the data by broadening the data gathering and parameters set.
Testing the Solution Depending on the outcome in the previous step above when the final solution is selected, it will need to be tested. This usually takes place in a simulation or a test marketing application. A great example is the
LDR 5301, Methods of Analysis for Business Operations 4
UNIT x STUDY GUIDE Titlemarketing practices of the cola wars in the 1970s (predictive analysis) where consumers were put to a taste test to determine what they liked better, Coca-Cola or Pepsi Cola. The catch was that the survey was a blind taste test (Little, 2020). In the example above, hundreds of thousands of dollars were spent by each company to promote their product. The follow-up in the 1980s was when Coca-Cola did away with “Old Coke” and introduced “New Coke” (Little, 2020). This is, again, business analytics in motion. Analyzing the Results Here is where decision makers earn their worth. They have to make a decision based on the final evidence provided. It could mean many things. For example, a company might decide to spend a million dollars in LED lights to save the company overhead costs of $4 million over 2 1/2 years in electrical costs. The decision could even be to gain more shelf space in supermarkets, drug stores, or gas stations. A company could change their product taste and name by creating a new marketing hype to gain market share. The costs of this could be in the billions of dollars. Implementing the Results This is putting the plan into action. Of course, after the data is analyzed, the numbers do not do the work. Leadership, human capital, strategies, planning, resources, and timelines must be put into place to implement, execute, and measure the results in the real world.
Putting the Data and Decision-Making Into Action This is where the mathematical model you selected takes action. There are two simple business questions that are always at the forefront of decision-making:
• How much profit will we make? • What is our breakeven?
Your assignment this week will allow you to compute the breakeven and profit analysis for the BAT Car Company. The assignment will expose you to the business analytics model, as well as the decision-making model in the textbook, and allow you to apply what you have learned in this lesson.
References
Little, B. (2020, March 12). How the ‘blood feud’ between Coke and Pepsi escalated during the 1980s cola wars: History. https://www.history.com/news/cola-wars-pepsi-new-coke-failure
Render, B., Stair, R. M., Jr., Hanna, M. E., & Hale, T. S. (2018). Quantitative analysis for management (13th
ed.). Pearson. https://online.vitalsource.com/#/books/9780134518558 Wakabayashi, D. (2020, March 2). Waymo includes outsiders in $2.25 billion investment round. The New
York Times. https://www.nytimes.com/2020/03/02/technology/waymo-outside-investors.html Waymo. (n.d.). Our journey. https://waymo.com/journey/
LDR 5301, Methods of Analysis for Business Operations 5
UNIT x STUDY GUIDE Title-
Course Learning Outcomes for Unit I
Required Unit Resources
Unit Lesson
Defining the Problem
Developing the Model
Acquiring the Data
Developing a Solution
Testing the Solution
Analyzing the Results
Implementing the Results
Putting the Data and Decision-Making Into Action
References
Suggested Unit Resources
Learning Activities (Nongraded)
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