Assignment 2: Operations Decision

Assignment 2: Operations Decision

Subject: General Questions    / College life
Question
Assignment 2: Operations Decision

> Due Week 6 and worth 300 points

>

> Using the regression results and the other computations from Assignment 1,

>

> determine the market structure in which this frozen, low-calorie

> microwavable

> food company now operates.

> [In assignment #1, the company estimated a demand curve and used a marginal

>

> cost curve as its supply curve. You determined the equilibrium in the market

>

> where P =MC [or Qs = Qd]. You calculated the various elasticities using the

>

> estimated demand at its current price of 500 cents. While not required, if

> you

> look at the own price elasticity at the equilibrium price and quantity

> solved

> for in Assignment #1 you will notice a problem for the firm if it thinks it

> is

> operating in a competitive market.

> Now that you know that the firm faces a downward sloping demand curve and

> that

> it has pricing power, you are being asked to rethink how the firm should

> behave

> in the market as it actually used its pricing power to determine the profit

>

> maximizing price and output in this assignment.

> Use the Internet to research two (2) leading competitors in the low-calorie

>

> microwavable food industry, and take note of their pricing strategies,

> profitability, and their relationships within this industry (within the USA

> and

> worldwide). Use the IBIS Report for the Frozen Food Production Industry (SIC

>

> Code 31141) to be provided by your instructor.

>

> Write a six to eight (6-8) page paper in which you:

> 1. Outline a plan that will assess the impact of the market structure/cost

> data

> based on the activity in the first assignment for the company’s operations.

> Use

> a supply curve of the following form to reexamine your conclusions from the

>

> first assignment: Qs = -7909.89 +79.0989P [OR MC = 100 + 0.01264Q]. This new

>

> supply curve gives you the same equilibrium price and quantity as before,

> but is

> based on the firm’s marginal cost curve and its behavior in Assignment #1.

> Further assume that the estimate of the firm’s AVC = 100 + 0.009Q and that

> VC/TC

> =0.71 always [implying that FC/TC = 0.289]. These are the industry average

> estimates from the IBIS report for this industry.

> 2. Suppose the business operations have now changed from the market

> structure

> analyzed in the activities required for the first assignment due to this new

>

> data about costs. Determine two (2) likely factors that might have caused

> the

> changed behavior. Predict the primary manner in which this change would

> likely

> impact business decisions in the new market environment.

> 3. Analyze the major short-run and long-run production and cost functions

> implied by this new cost data for the frozen, low-calorie microwaveable food

>

> company. Use the information contained in the IBIS report. Suggest

> substantive

> ways in which the frozen, low-calorie food company may use this information

> in

> order to make decisions in both the short-run and the long run.

> 4. Determine the possible circumstances under which the company should

> discontinue operations. While no specific fixed or total cost data are

> provided,

> use the newly provided cost data above and your knowledge from the textbook

> on

> the relation of fixed and variable costs to revenue to develop estimates

> that

> might suggest key actions that management should take in order to confront

> these

> circumstances. Provide a rationale for your response.

> 5. Suggest one (1) pricing policy that will enable your frozen, low-calorie

>

> microwavable food company to maximize profits. Provide a rationale for your

>

> suggestion that will involve comparison of the first assignments two

> possible

> price and quantity pairs with the new optimum presented here in Assignment

> #2

> 6. Outline a plan, [based on the original information provided in the first

>

> assignment along with the IBIS report industry cost data for the firm], that

> the

> company could use in order to evaluate its financial performance. Consider

> all

> the key drivers of performance, such as company profit or loss for both the

>

> short term and long term, and the fundamental manner in which each factor

> influences managerial decisions.

> 7. Recommend two (2) actions that the company could take in order to improve

> its

> profitability and deliver more value to its stakeholders in line with the

> recent

> history and forecast future behavior for the Frozen Food Production Industry

>

> [SIC Code 31141] as outlined in the IBIS report. Outline, in brief, a plan

> to

> implement your recommendations.

> 8. Use at least five (5) quality academic resources in this assignment.

> Note:

> Wikipedia does not qualify as an academic resource.

>

> Your assignment must follow these formatting requirements:

> * Be typed, double spaced, using Times New Roman font (size 12), with

> one-inch

> margins on all sides; citations and references must follow APA or

> school-specific format. Check with your professor for any additional

> instructions.

> * Include a cover page containing the title of the assignment, the student’s

>

> name, the professor’s name, the course title, and the date. The cover page

> and

> the reference page are not included in the required assignment page length.