1. For the information given, rank the customers in terms of Customer Lifetime Value.
|
|
Avg. Annual Sales
|
Avg. Profit Margin
|
Expected Lifetime
|
|
Customer A
|
$2,000
|
15%
|
8 years
|
|
Customer B
|
$3,000
|
12%
|
6 years
|
|
Customer C
|
$4,000
|
30%
|
4 years
|
Suppose the discount rate is 6%. Which customer has the highest CLV and which has the lowest CLV? For full credit, please provide at least one step of calculation and the correct CLV for each customer.
2. How does your definition of Customer Service compare to the Seven R's Rule?
This is an open question. For full credit, please state your opinion and discussthe differences, if any, with no less than 100 words.
3. What are the challenges of doing business in China and India? Please list at least 4 concerns for each country.
4. A company has collected the following information for three potential facility locations.
|
Location
|
Annual Fixed Cost
|
Variable cost per unit
|
|
A
|
$2 million
|
$50
|
|
B
|
$3 million
|
$30
|
|
C
|
$4 million
|
$25
|
|
|
Avg. Annual Sales
|
Avg. Profit Margin
|
Expected Lifetime
|
|
Customer A
|
$2,000
|
15%
|
8 years
|
|
Customer B
|
$3,000
|
12%
|
6 years
|
|
Customer C
|
$4,000
|
30%
|
4 years
|
(a) What is the breakeven quantity between Location A and Location B? Please provide at least one step of calculation and the correct answer for full credit.
(b) If the expected production volume is 0.5 million units, which location offers the lowest total cost? Please calculate the total cost at each location for full credit.