Assignment 2: Operations Decisions

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 the low-calorie frozen, microwavable food company
operates.
Use
the Internet to research two (2) of the leading competitors in the low-calorie
frozen, microwavable food industry, and take note of their pricing strategies,
profitability, and their relationships within the industry (worldwide).
Write
a six to eight (6-8) page paper in which you:
1.
Outline a plan that will assess the effectiveness of the market
structure for the company’s operations.Note: In Assignment 1, the assumption was that
the market structure [or selling environment] was perfectly competitive and
that the equilibrium price was to be determined by setting QD equal to QS. You
are now aware of recent changes in the selling environment that suggest an
imperfectly competitive market where your firm now has substantial market power
in setting its own “optimal” price.
2. Given that business operations have changed
from the market structure specified in the original scenario in Assignment 1,
determine two (2) likely factors that might have caused the change. Predict the
primary manner in which this change would likely impact business operations in
the new market environment.
3.
Analyze the major short run and long cost functions for the
low-calorie, frozen microwaveable food company given the cost functions below.
Suggest substantive ways in which the low-calorie food company may use this
information in order to make decisions in both the short-run and the long-run.
TC = 160,000,000 + 100Q +
0.0063212Q2
VC = 100Q + 0.0063212Q2
MC= 100 + 0.0126424Q
4.
Determine the possible circumstances under which the company
should discontinue operations. Suggest key actions that management should take
in order to confront these circumstances. Provide a rationale for your
response.(Hint: Your firm’s price must cover average variable costs in the
short run and average total costs in the long run to continue operations.)
5.
Suggest one (1) pricing policy that will enable your low-calorie,
frozen microwavable food company to maximize profits. Provide a rationale for
your suggestion.
(Hints:
·
In Assignment 1, you determined
your firm’s market demand equation. Now you need to find the inverse demand
equation. Having found that, find the Total Revenue function for your firm (TR
is P x Q). From your firm’s Total Revenue function, then find your Marginal
Revenue (MR) function.
·
Use the profit maximization
rule MR = MC to determine your optimal price and optimal output level now that
you have market power. Compare these values with the values you generated in
Assignment 1. Determine whether your price higher is or lower.)
6.
Outline a plan, based on the information provided in the scenario,
which 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.
(Hints:
·
Calculate profit in the short
run by using the price and output levels you generated in part 5. Optional: You
may want to compare this to what profit would have been in Assignment 1 using
the cost function provided here.
·
Calculate profit in the long
run by using the output level you generated in part 5 and cost data in part 3
and assuming that the selling environment will likely be very competitive.
Determine why this would be a valid assumption.)
7.
Recommend two (2) actions that the company could take in order to
improve its profitability and deliver more value to its stakeholders. 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.
The
specific course learning outcomes associated with this assignment are:
·
Analyze short-run and long-run production and cost functions.
·
Apply macroeconomic concepts to changes in global and national
economies and how they affect economic growth, inflation, interest rates, and
wage rates.
·
Evaluate the profit-maximizing price and output level for given
operating costs for monopolies and firms in competitive industries.
·
Use technology and information resources to research issues in
managerial economics and globalization.
·
Write clearly and concisely about managerial economics and
globalization using proper writing mechanics.