Semester 4 Final Exams

Good luck

9/11/2013   Saturday

Human Resource Management

11/11/2013  Monday

Operations Management

13/11/2013  Wednesday

Strategic Management

16/11/2013  Saturday

Project Management

18/11/2013  Monday

International Marketing

20/11/2013  Wednesday

Natural Resource Management

 Time: 5:00 - 8:00 pm

The North-South Airline

In 2010, Northern Airlines* merged with Southeast Airlines to create the fourth largest U.S. carrier. The new North-South Airline inherited both an aging fleet of Boeing 737—200 aircraft and Stephen Ruth. Ruth was a tough former secretary of the navy who stepped in as new president and chairman of the board.Ruth’s first concern in creating a financially solid company was maintenance costs. It was commonly believed in the airline industry that maintenance costs rose with the age of the aircraft. Ruth quickly noticed that, historically, there has been a significant difference in reported B737—200 maintenance costs (from ATA Form 41s) both in the airframe and engine areas between Northern Airlines and Southeast Airlines, with Southeast having the newer fleet.On November 12, 2010, Ruth assigned Peg Young, vice president for operations and maintenance, to study the issue.

Specifically, Ruth wanted to know:

(1) whether the average fleet age was correlated to direct airframe maintenance costs and

(2) whether there was a relationship between average fleet age and direct engine maintenance costs.

Young was to report back with the answer, along with quantitative and graphical descriptions of the relationship, by November 26.First, Young had her staff construct the average age of Northern and Southeast B737-200 fleets, by quarter, since the introduction of the aircraft to service by each airline in late 2001 and early 2002.

The average age of each fleet was calculated by first multiplying the total number of calendar days that each aircraft had been in service at the pertinent point in time by the average daily utilization of the respective fleet to total fleet-hours flown. The total fleet-hours flown was then divided by the number of aircraft in service at that time, giving the age of the "average" aircraft in the fleet.The average utilization was found by taking the actual total fleet-hours flown at September 30, 2010, from Northern and Southeast data, and dividing by total days in service for all aircraft at that time. The average utilization for Southeast was 8.3 hours per day, and the average utilization for Northern was 8.7 hours per day. Because the available cost data were calculated for each yearly period ending at the end of the first quarter, average fleet age was calculated at the same points in time.

The fleet data are shown in the following table. Airframe cost data and engine cost data are both shown paired with fleet average age.

North-South Airline   Data for Boeing 737-200 Jets

Year

Northern Airlines Data

Southeast Airlines   Data

Airframe Cost per   Aircraft

Engine Cost per   Aircraft

Average Age (hours)

Airframe Cost per   Aircraft

Engine Cost per   Aircraft

Average Age (hours)

2003

$51.80

$43.49

 6,512

$13.29

$18.86

5,107

2004

 54.92

 38.58

 8,404

 25.15

 31.55

8,145

2005

 69.70

 51.48

11,077

 32.18

 40.43

7,360

2006

 68.90

 58.72

11,717

 31.78

 22.10

5,773

2007

 63.72

 45.47

13,275

 25.34

 19.69

7,150

2008

 84.73

 50.26

15,215

 32.78

 32.58

9,364

2009

78.74

79.60

18,390

35.56

38.07

8,259

*Dates and names of airlines and individuals have been changed in this case to maintain confidentiality. The data and issues described here are actual.

DISCUSSION QUESTION  Prepare Peg Young’s response to Stephen Ruth.

Human Resource Management Assignment

15 Marks

Scenario:

The Nile Valley is a private company operating in the agricultural and food processing sector in Sudan since 1985. Due to promising prospects, the company adopted a growth strategy to expand both the agricultural activities (area wise, new agricultural products and new processes and technologies) and the food processing business by establishing two new factories in addition to the already operating factories.

Tasks:

The company estimated the human resource needed to meet the requirement of the adopted growth strategy as follows:

  1. 10 senior agricultural engineers and 30 fresh agricultural graduates
  2. 2 general managers for the two factories plus 5 senior food processing engineers and 8 fresh graduates in the area of food processing
  3. 4 senior administrators in the fields of accounting and finance, IT and marketing

Task (1)

Suggest sources and methods of recruiting each of the above mentioned categories of staff

Task (2)

Recommend appropriate methods of selection for the recruited categories to ensure fitness of candidates to job

Task (3)

Propose whenever deemed necessary the appropriate training and development programs for the different categories of staff

Note:

The total number of assignment pages should not exceed 7 pages

The submission date is 30/10/2013

 

Given the competitive exploration and extraction problem:

Year

Production

(106 br/yr)

Price

($/br)

Reserves

106 br

1997

552

54

7170

1998

557

51

9240

1999

554

52

9460

2000

551

68

9801

2001

548

75

9830

2002

544

79

9900

2003

522

85

8500

2004

493

90

6400

2005

458

94

6500

2006

417

95

4300

2007

368

100

4000

2008

312

101

3000

2009

251

102

2800

2010

185

107

1500

2011

113

109

1300

2012

22

110

800

Required:

Determine the optimal terminal time using the formula

aT – a(1 – e-dT)/d = R0

Where:

a is the intercept term for the downsloping demand curve

d = 0.05, which is the discount rate reflecting the time value of money

R0 is the reserve level at 1997

The solution should be submitted before the last lecture on 28/10/2013

 

Hospital costs

Gotham city hospital unionized. In 2006 received an average annual Salary of $45,000. The hospital administrator is considering change in the contract with nurses for 2007. In turn, the hospital may also change the way it charges nursing costs to each department.

The hospital each department accountable for its financial performance and it allocates     revenues and expenses to departments. Consider the expenses of the obstetrics department in 2006.

Variable expenses (based on 2006 patient-days) are:

Meals

$610.000

Laundry

260.000

Laboratory

900.000

Pharmacy

850.000

Maintenance

150.000

Other

530.000

Total

$ 3.300.000

 Fixed expenses (based on number of beds) are:

      Rent

$ 3.300.000

General administrative  services

2.200.000

 Janitorial

200.000

 Maintenance

150.000

 Other

350.000

 Total

$ 5.900.000

Management assigns nurses to departments on the basis of annual patient-days as follows:

Volume Level in Patient-days

Number of Nurses

10.000-12.000

30

12.001-16.000

35

Total patient-days are the number of patient multiplied by the number of days they are hospitalized. The hospital charges each department for the salaries of the nurses assigned to it.
During 2006, the obstetrics department had a capacity of 60 beds, billed each patient an average of $810 per day, and had revenues of $12, 15 million.

Questions

$11.     Compute the 2006 volume of activity in patient-days.

$12.     Compute the 2006 patient-days that would have been necessary for the obstetrics department to recoup all fixed expenses except nursing expenses.

$13.     Compute the 2006 patient-days that would have been necessary for the obstetrics department to breakeven including nurses salaries as fixed cost.

$14.     Suppose obstetrics must pay $200 per patient-day for nursing services. This plan would replace the two-level, fixed –cost system employed in 2006.compute what the break-even point in patient-days would have been in 2006 under this plan.

Answer

$11.       $12,150,000= 15,000 patient-days

                  $810

$12.       Variable costs = $3,300,000 = $220 per patient-day

                                         15,000

Contribution margin = $810 - $220 = $590 per patient-day

To recoup the fixed expenses:

$5,900,000 ÷ $590 = 10,000 patient-days

$13.        The fixed cost levels differ as the relevant range changes:

Patient-Days

Non-Nursing

Nursing

Total

Fixed Expenses

Fixed Expenses

Fixed Expenses

10,000-12,000

$5,900,000

$1,350,000(1)

$7,250,000

12,001-16,000

5,900,000

1,575,000(2)

7,475,000

(1) $45,000 x 30 = $1,350,000

(2) $45,000 x 35 = $1,575,000

To break even on higher level of fixed costs:

$7,250,000 ÷ $590 = 12,288 patient-days

This answer exceeds the higher-level maximum; therefore, this answer is infeasible.

The department must operate at a $7,475,000 level of fixed costs to break even:

$7,475,000 ÷ $590 = 12,669 patient-days.

$14.       The nursing costs would have been variable instead of fixed. The contribution margin per patient-day would have been $810 - $220 - $200 = $390. The break-even point would be higher: $5,900,000 ÷ 390 = 15,128 patient-days.

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