problem 1)

Does the new economy’s “network society” play by traditional principles of demand and supply or do we now live in a “network society,” one in which profits and economic growth have reached such heights that they seem to defy the core principles of economics? Some argue that unit value of products used in networks have increased with more and more supply of these products, contradicting the traditional principle that increased supplies cause lower value. Using your current company and real-world exs of today’s most successful companies in the “network society” – Microsoft, Cisco Systems, America Online, Oracle, Sun Micro Systems, Dell Computers, eBay, etc., critically discuss the above statement by reading the WSJ article below: http://www.utdallas.edu/~liebowit/knowledge_goods/solong.pdf

problem 2)

Visit U.S. Bureau of Labor Statistics website at www.bls.gov. Using historic time series data on monthly unemployment rates (make sure your original data is not seasonally adjusted) from January 2001 to March 2013, find out the following:

a) Monthly adjusted seasonal indices using a moving average technique.

b) Estimate the unemployment trend equation by deseasonalizing the data. Interpret the statistical significance of your regression results at 5% level of significance.

c) Forecast the unemployment rates for the next three months of 2013 based on your trend and monthly seasonal indices.

d) Based on the data and the unemployment trend, what improvements will you incorporate in your forecasting techniques to make your predictions accurate?

problem 3)

Advanced Package Service (APS) offers overnight package delivery to business customers. APS has recently decided to expand its facilities to better satisfy current and projected demand. Current volume totals three million packages per week at a price of $15 each, and average variable costs are constant at all output levels. Total fixed costs are $4 million per week, and profit contribution averages one-fourth of revenues on each delivery. After completion of the expansion project, total fixed costs will increase by 50%, but variable costs will decline by 25%.

a) find out the change in APS's weekly breakeven output level that is due to expansion.

b) Assuming that volume remains at three million packages per week, find out the change in the degree of operating leverage that is due to expansion.

c) Again assuming that volume remains at two million packages per week, what is the effect of expansion on weekly profit?

problem 4)

Based on the information you have provided in your MBAE application about your work experience and career objective, develop a working document that will help your current or future management team of your company to make production and cost decisions. The overall goal of this document is to grow your company and maximize the present value of future profits. Your document should list the necessary qualitative and quantitative data that you have to collect to estimate and forecast production and cost of the company’s product. You do not have to estimate any dollar value in this document. The purpose of this document is to allow your management team some guidelines on making production and cost decisions. The document will serve as a managerial decision-making tool for your company