Behavioral Finance: Application to Risk: Contact us for answers at assignmentssolution@gmail.com

Behavioral Finance: Application to Risk

This exam consists of two parts. Part 1 is worth 75 points and Part 2 is worth 25 points.

Part 1 pertains to the recent data breach at the firm Equifax, and Part 2 pertains to the target price for Facebook stock developed by sell side analysts at Morgan Stanley.

There is an answer template file for the exam. Please answer in the template file, and add your name to the template file when submitting.

Please remember that this exam is to be done INDIVIDUALLY, not in groups, or in communication with anyone else.

Part 1. Equifax

The questions in Part 1 of the exam are based on information which is provided in a series of articles whose links appear below. Your task in Part 1 of the exam is to be able to identify and distill a small set of behavioral issues from a long, complicated narrative. The links describing the narrative are as follows:

https://www.nytimes.com/2017/09/23/business/equifax-data-breach.html?action=click&contentCollection=Business%20Day&module=RelatedCoverage&region=EndOfArticle&pgtype=article

https://www.nytimes.com/2017/09/26/business/equifax-ceo.html?action=click&contentCollection=Business%20Day&module=RelatedCoverage&region=EndOfArticle&pgtype=article

https://www.nytimes.com/2017/10/03/business/equifax-congress-data-breach.html?_r=0

https://techcrunch.com/2017/10/03/former-equifax-ceo-says-breach-boiled-down-to-one-person-not-doing-their-job/

https://www.bloomberg.com/gadfly/articles/2017-09-21/equifax-s-board-needs-a-cybersecurity-dream-team

https://www.psychologytoday.com/blog/platform-success/201710/equifax-lessons-board-directors-and-ceos

Answer the specific questions below. Your answers should be short, crisp, to the point, and focused on answering the questions. Resist the temptation to write long essays that purport to show everything you have learned in the course. As you answer each question, keep in mind that you are being asked to discuss how a series of behavioral concepts apply to the Equifax case. Therefore your answers need to:

1.      explicitly identify key behavioral concepts;

2.      demonstrate that you understand these concepts;

3.      apply the concepts successfully to the Equifax case, by describing how the concepts specifically relate to key details of the case. 

1. Slide 2 of the lecture for Day 2 of the behavioral finance course describes a matrix summarizing the process-pitfall framework.  In the context of the process-pitfall framework, write down what you consider to be the four most important cells. Answer the question by placing four numbers in the matrix below, with 1 being what you consider to be the most important cell.

2. Given your answer to question 1, identify what you would judge to be the most important issue pertaining to the psychology of risk, at the level of the individual. Explain your answer in a few sentences (5-10 sentences), being sure to indicate how your answer pertains to the information provided in the articles about the Equifax breach.

3. Given your answer to question 1, identify what you would judge to be the most important issue pertaining to heuristics and biases, at the level of the individual? Explain your answer in a few sentences (5-10 sentences), being sure to indicate how your answer applies to the information provided in the articles about the Equifax breach.

4. Given your answer to question 1, identify what you would judge to be the most important issue pertaining to risk styles, at the level of the individual? Explain your answer in a few sentences (5-10 sentences), being sure to indicate how your answer applies to the information provided in the articles about the Equifax breach.

5. Chapter 6 of the book Behavioral Risk Management and chapters 9 and 11 of the book Behavioral Corporate Finance focus on frameworks for analyzing organizational issues, especially those associated with risk management. Given your answer to question 1, which pertains to process-pitfall, identify which other important conceptual frameworks pertain to group and organizational decision issues associated with the Equifax case.

Begin your answer to this question by naming two behavioral organizational concept which you regard as being the most relevant, besides process-pitfall. After identifying the conceptual frameworks, discuss how your answer pertains to the information provided in the articles about the Equifax breach.

Part 2. Target Price for Facebook

Day 2 PM of the behavioral finance course includes a discussion about growth opportunities bias. An application of this concept to Amazon stock can be found at https://www.forbes.com/sites/hershshefrin/2017/10/01/credit-suisses-mistaken-amazon-valuation-is-but-the-tip-of-the-iceberg/#2a2cb6f33995.

Part of the material for this exam is a Morgan Stanley report on Facebook, dated July 27, 2017. The April report contains a DCF analysis. Analyze the DCF analysis in this report for the presence of growth opportunities bias.

1. Compute Facebook’s perpetual growth rate associated with the terminal horizon that would lead the firm to earn its cost of capital exactly during the terminal horizon, given the other assumptions in the Morgan Stanley report. Write down any formulas that you use, and show your work.

2. The target price valuation of Facebook’s stock, given that Facebook will be expected to earn its cost of capital exactly during the terminal horizon. To arrive at this value, fill in the table below, whose items appear in the Morgan Stanley DCF analysis.

                                                                                                                                                             

Show all calculations below

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DRM 03

Data Editing and Coding

Assignment - I

Assignment Code: 2017DRM03B1                               Last Date of Submission: 15th November 2017
                               Maximum Marks: 100
Attempt all the questions.

SECTION-A (25 marks for each question)

1.      Discuss the different aspects that must be kept in mind while preparing data.

2.      Discuss the principles of Data Editing.

SECTION-B
Case Study(50 marks)
This questionnaire is to study the behavior of individual investor and your kind cooperation will help us in understanding individual investor better.

Q1.  Your Gender     Male           Female   
               
Q2.  Your age would be                
                     < 25 years               
            25 to < 35 years               
            35 to < 45 years               
            45 to < 55 years               
                    ≥ 55 years               
               
Q3.  Your Occupation               
                           Salaried Employee                 
                           Businessman                             
                Self-employed professional                     
                Any Other.  Pls specify.               
               
Q4.  Your approximate monthly income                
                                  < 10000               
                          10000 to < 20000                
                          20000 to < 40000               
                          40000 to < 60000               
                          60000 to < 100000               
                                 ≥ 100000                        
               


Q5. If you save, reasons for savings
( Tick as many as applicable )               
                          Planning for retirement               
                          Purchase of Property               
                          To claim Tax Benefit               
                          Marriage of Children               
                          For children’s education               
                                         
Q6. Which of the following instruments you usually prefer to invest in:
       (Rank in order of your preference with 1 being  most preferred)
                         Bank Fixed Deposit               
                         Public Providend Fund               
                         Life Insurance Policy               
                         Medical Insurance Policy               
                         Mutual Funds               
                         Shares of listed companies                 
                         Property/ Real Estate                

Q7.   Your preference for of an Investment instrument is influenced by
         (Tick the option that is most appropriate)   
                                   Parents               
                                   Colleagues               
                                   Friends               
                   As advised by my tax consultant               


The following are certain opinion statements concerning investment behavior. There is no right / wrong answers. Mark the extent you of your agreement with each of these statements.

SA = strongly agree,  A = agree,   N= Neutral,  DA= Disagree, SDA = Strongly Disagree

    SA    A    N    DA    SDA
My earning is just enough for the family to survive                   
Saving is an important habit                   
There is no use of saving as money always depreciates.                   
My saving is forced because of the Tax Benefits I get.                   
My family urges me to save.                   
I save because I do not want to depend on my children                   
Saving has been taught to me by my parents                   
Saving in the share market is risky for a person like me                   
I do not save as I do not have much information on different schemes.                     

Case Question:

a)     For each of the questions do the necessary coding.
b)     After coding indicate the scale in which the data has been obtained.      

DRM 03

Data Editing and Coding

Assignment - II

Assignment Code: 2017DRM03B2                               Last Date of Submission: 15th November 2017
                               Maximum Marks: 100
Attempt all the questions.

SECTION-A (25 marks for each question)

1.     What are the principles of coding of a questionnaire?

2.     In an attitude survey using Likert Scale, the respondent ticks from  Strongly Agree to Strongly Disagree which is coded as either 1 to 5 or reverse coded from 5 to 1. When do you consider coding to be reversed?


SECTION-B (50 marks)

This is a survey on people’s eating habits especially those who carry lunch from home. We seek your support in getting your true answers.

Q1.       Your Gender  
  
                     Male                  Female 

Q2.      Specify your age

      Below 25 years        25 – 35 years             35 – 45 years         45- 55 years           > 55 years    

Q3.      Your occupation call for 
             Often travel within the city                                           Mostly in the office       
             Mostly on tour outside the city                                    

Q4.     Specify your monthly income(Rs):
             < 10000                                       10000 - 20000                  20000 – 40000     
              40000 -  60000                           60000 - 100000                           > 100000     

Q5.      Distance you travel from residence to office would be approximately
             < 5 Kms                           5 – 10 KMS                 10 – 20 KMS    
         20- 30 KMS                  > 30 KMS  

Q6.      I travel to office by ( Tick the most appropriate one )
             Self-Driven own car                                    Chauffer driven own car   
             Shared / Pooled tax                                    Chartered Bus              
             Ordinary Bus              
Q7.      Do you get lunch from home?
                                Yes                         NO     

Q8.      The following are certain opinion statements concerning eating habits. There is no right / wrong answers. Mark the extent of your agreement with each of these statements.
SA = strongly agree     A = Agree       N = Neutral      DA = Disagree     SDA = Strongly disagree

a. I think it is hygienic to have home food.
    SA    A    N    DA    SDA
b. Eating outside everyday will spoil my health     SA
    A    N    DA    SDA
c. I like to avoid spicy food
    SA    A    N    DA    SDA
d. Outside food does suit my pocket
    SA    A    N    DA    SDA
e.  I prefer to have variety of dishes during lunch
    SA    A    N    DA    SDA
f.  I usually have  a very light lunch
    SA    A    N    DA    SDA
g.  I prefer to try out new types of food
        SA    A    N    DA    SDA
h. My family does not have time to cook my lunch
    SA    A    N    DA    SDA
i. I leave too early to office, hence do not take lunch from home
    SA    A    N    DA    SDA
j. Having the same food for lunch is boring
    SA    A    N    DA    SDA
k. Lunch time is usually fun as we share with other collegues
    SA    A    N    DA    SDA
l. My collegues pass comments on eating habits, hence I eat out.
    SA    A    N    DA    SDA

Questions:

a)     For each of the above question do the coding.
b)     Indicate what type of analysis that can be done based on the way the answers to the questions have been coded.

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DRM 02

Hypothesis Testing

Assignment - I

Assignment Code: 2017DRM02B1                               Last Date of Submission: 15th November 2017
                               Maximum Marks: 100
Attempt all the questions.

SECTION – A (25 marks for each question)

1.      a)     Explain why do we carry out Hypothesis testing.
b)     Discuss the different types of Errors  Type I  and   Type II   while   conducting   hypothesis testing.
c)     Discuss the following approaches we   adopt for either Rejection or otherwise of the Null Hypothesis:
               (i)     Critical value approach
             (ii)      Confidence Interval approach
              (iii)     p-value approach

2.     A certain brand of wheat flour is offered for sale in the market in gunny bags, each weighing 25Kg nominal with a standard deviation of 0.25Kg. A buyer decides to check the average bag weight on a sample of 64 bags. He makes up his mind to accept the average weight if the sample weight is 24.9kg or more and 25.10kg or less. What is the probability that the average weight of each bag is accepted as much as claimed?


SECTION – B
Case Study (50 marks)

A cardiologist was interested in understanding whether there is any difference in the cholesterol levels of his patients who come with cardiac ailments. He felt that since non vegetarians eat considerable protein than fat their level of cholesterol would be somewhat less than those of vegetarians (since they tend to consume more of fat and oil in their food intake.) In order to test his hypothesis, the cardiologist chose to conduct an experiment. He randomly selected from his patients 12 non –vegetarians and 12 vegetarians for his study with the consent of the patient. He took their blood samples and sent to his laboratory to test their cholesterol levels and found the following data:

Non veg patients    232    245    183    275    180    195    212    232    240    280    292    196
Veg  Patients    245    256    232    275    300    297    320    280    275    344    289    300

The doctor from his basic knowledge of statistics knew that before he could carry out the relevant hypothesis test, he should look at the descriptive statistics and obtained the following results.
   
   


Descriptives

    Patient        Statistic    Std. Error
Cholesterol levels    Non Veg    Mean    230.16    11.04936
          Median    232.00   
          Variance    1465.0   
          Std. Deviation    38.27   
          Skewness    .261    .637
          Kurtosis    -1.158    1.232
     Veg    Mean    284.41    9.03986
          Median    284.50   
          Variance    980.629   
          Std. Deviation    31.31   
          Skewness    .129    .637
          Kurtosis    .060    1.232





The doctor also knew that there are several other assumptions before he can proceed with understanding his research question. Based on your knowledge you are required to help him with the following:

(i)     Write down the null and alternative hypothesis for the above research problem.
(ii)     Test the two samples have equal variances. Use 5% level of significance.
(iii)      Use the appropriate hypothesis test to check whether indeed non-vegetarians have lower cholesterol levels than do vegetarians. Use 5% level of significance. 
(iv)     Verify your assumptions based on the output given above.


DRM 02

Hypothesis Testing

Assignment - II

Assignment Code: 2017DRM02B2                               Last Date of Submission: 15th November 2017
                               Maximum Marks: 100
Attempt all the questions.

SECTION-A (25 marks for each question)

1.     In hypothesis testing, we use both Z test and ‘t’ statistic for testing the single mean test. Explain when we would use a Z test and when we would use a ‘t’ statistic. Explain the other assumptions associated with each of these tests.

2.     A random sample of size 10 from a normal population produced the following values:
      
63    72    68    74    77    65    61    71    73    69

Test the hypothesis that population variance is 32.

SECTION-B (50 marks)

In 2003, Mumbai based Care Hygiene Co. (Care Hygiene), a well-known company dealing in healthcare products, recorded sales of Rs.665 crores and a net income of Rs. 45.6 crores. ‘Nutravit’, a chocolate flavored health drink, was one of its flagship products. But of late, Nutravit has been facing stiff competition from a number of other chocolate-based beverages that had flooded the market. Its market share had significantly come down. Care Hygiene decided it was high time it took some efforts to tackle competition and regain market share. The company decided to market a new variant of Nutravit, with an improved formulation and in a new flavor.

By mid-2003, Care Hygiene was ready with its new variant – a powdered mix which when mixed with milk gave a nutritious as well as tasty vanilla cum chocolate flavoured drink. He selected Mumbai and Nagpur as the test cities because there were significant similarities in the consumption patterns of its health drink ‘Nutravit’ in these two cities. In Mumbai, Care continued to market its established health beverage, while in Nagpur it replaced it with the new Vanilla cum chocolate flavor.

In each city, a sample of 200 households were selected and interviewed over a six-month period. Based on each household’s reported consumption of beverages, Care’s marketing manager chartered the results showing the different household consumption rates in Mumbai and Nagpur.


Consumption Rate    Nagpur
(Vanilla cum chocolate)    Mumbai
(Chocolate)
    Number    % households    Number    % households
Heavy    34    17    28    14
Moderate    52    26    44    22
Light    50    25    42    21
Non-User    64    32    86    43
Total    200    100    200    100





In Mumbai, where the chocolate flavored was marketed, 114 households reported using the beverage. In Nagpur, where the new variant was test marketed, 136 households reported using the beverage mix.

1.    Care’s marketing manager wondered if the difference in usage rates (57% in Mumbai and 68% in Nagpur) could be attributed to the new vanilla formulation or if the difference had merely resulted by chance due to sampling.

2.    Since the new formulation was an improved one with a new flavor, it was more expensive. The management decided to proceed with it only if there was sufficient evidence that the new variant would yield better results. While test marketing the new variant, Care’s marketing manager had decided that if it achieved a 75% usage rate among target households, he would recommend the launching of the product. What should he do? Based on the sample of 200 households, the new variant had achieved a usage rate of 68%. Should he recommend to the management for or against launching of the new product?

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DRM 01

Sampling Methods & Techniques

Assignment - I

Assignment Code: 2017DRM01B1                               Last Date of Submission: 15th November 2017
                               Maximum Marks: 100
Attempt all the questions.

SECTION – A (25 marks for each question)

1.      Explain the need for sampling.

2.     Explain the following concepts: 

    (i)      Population
                (ii)      Sample Frame
              (iii)      Sampling Units,
               (iv)     Sampling Errors and Non-sampling Errors.

SECTION-B
Case Study (50 marks)

The following is a list of residents in a group housing society where there are 180 residents. Each household own only one car and the distance travelled using the car is noted for a random day and it was recorded for each of the residents. The data obtained are as follows:

83    76    75    43    40    39    88    89    95    96
110    45    65    78    74    98    99    120    28    32
73    75    85    89    92    95    96    110    20    36
55    37    38    40    45    43    67    61    82    91
85    88    90    92    95    18    23    26    29    36
37    39    45    67    71    75    82    84    80    89
92    95    96    93    102    105    89    38    43    44
46    76    67    57    58    39    45    49    53    78
90    39    48    46    44    98    92    39    45    47
67    69    60    68    63    36    43    45    49    52
120    110    29    74    84    88    89    29    32    34
38    45    42    38    20    23    25    27    30    110
81    92    95    95    97    98    47    51    58    59
48    41    44    45    64    66    69    90    93    94
96    99    120    110    26    29    34    34    39    45
87    67    68    63    49    58    57    38    49    52
55    87    82    84    94    90    99    94    85    81
93    48    58    49    67    66    68    80    90    100





Case Questions:

a)     Enter this data in Excel sheet and find the distribution of the same. Also find the population mean and population standard deviation.

b)     Use Excel (data analysis) to get at least 200 random sample for size 30 each from the data. Find the mean of each sample. Using these sample means find the distribution of these sample means and also the mean and standard deviation of these sample means.

c)     Plot the distribution of these sample means and interpret the results. Explain what you see between the means of these sample means and the population mean and the standard deviation of these sample means with the population standard deviation. Do they give any result as per the Central Limit Theorem. If not why there is discrepancy.

d)     Take any one sample mean and find the 95% interval estimate for the population mean. See whether this interval contains the population mean.

e)     Based on the results obtained above, explain the central limit theorem and its importance in estimation of parameter.



DRM 01

Sampling Methods & Techniques

Assignment - II

Assignment Code: 2017DRM01B2                               Last Date of Submission: 15th November 2017
                               Maximum Marks: 100
Attempt all the questions.

SECTION – A (25 marks for each question)

1.     a)     Distinguish between Non-probability and Probability Sampling methods.
        b)     Discuss some of the uses of Non-Probability sampling methods.

2.     Explain the steps that need to be followed for carrying out Stratified Sampling.  How does it benefit over Simple Random Sampling?

SECTION – B (50 marks)

In an international campus of a University in the US, with about 24000 students—a large number of whom come from various parts of the world. For instance, there are about 200 Indian, 600 Malaysian students – about half of each category being women—and a further 1000 students from over 55 other countries attend this university. Martina an entrepreneurial lady staying close to the campus, desires to open a tailoring shop close to the University. She has a good sewing machine and would start her business immediately if she knew there would be adequate demand for her services.  To assess the market potential, Martina would like to talk to a few women to estimate how many clients she might attract. While the American  women buy ready-made clothes from the nearby shopping mall, she knows that the international women; particularly the Indian’s and Malay’s prefer to buy plain material from the shopping mall and either stitch their own blouses or get them stitched at their native homes.  Martina is interested in selecting a sample of about 100 of her prospective customers. Discuss the following:

Case Question:

a)    Suggest the method of sampling you suggest for the situation discussed above. Justify
your answer. 

          b)       For the method suggested by you, indicate the ease and the difficulties that would be
experienced by Martina. 

c)      What would be the sample frame for the method suggested by you?

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DOMM01
MANUFACTURING MANAGEMENT
Assignment – I

Assignment Code: 2017DOMM01B1                                Last Date of Submission: 15th November 2017
                                                    Maximum Marks: 100
Section-A
Each question carries 25 Marks.
1.     What is meant by quality assurance and by total quality control? How is each different from the modern concept of TQM?

2.     Continuous improvement is process. Discuss the how PDCA, Value Analysis/Value Engineering, Process Engineering, contribute in the process of continuous improvement.

Section-B (50 Marks)
Case Study

A manufacturer buys cardboard boxes from a supplier. The annual demand is 36000 boxes and is uniformly distributed. The boxes cost $4 each. The estimated order cost is $6 and the carrying cost rate is 30%.


Case Questions:
a)     What are the EOQ, annual order and carrying cost?
b)     How many times in a year are orders placed, and what the average time, in weeks between orders is?
c)     Consider the demand turns out to be 72,000 instead of 36000 boxes. If you had used the EOQ from part (a), what would be the annual order and carrying cost is? By how much does the cost increase compared to the cost estimated in part (a).
d)     Based on your answer for part (c) what is implication on the sensitivity of EOQ model and what conclusions can be drawn?

DOMM01
MANUFACTURING MANAGEMENT
Assignment – II

Assignment Code: 2017DOMM01B2                                          Last Date of Submission: 15th November 2017
                                                    Maximum Marks: 100
Section-A
Each question carries 25 Marks.
1.     a)     Elimination of waste is one of the cornerstones for JIT system of production. Discuss the
different waste and how does it help in bringing about a competitive strategy in manufacturing.

b)      Discuss the pre-requisites that are necessary for implementation of JIT method of manufacturing. 

2.      a)     What is group technology? What is its purpose? How is used in product design? How is it
used to form product families.
           b)      How   does   Focussed   Factory   combine  the features of a product layout and a process
layout?

Section-B (50 Marks)

Case Study
Texas Instruments – Learning and Leading by Example.
The quality strategy at Texas Instruments’ Defence Systems & Electronics Group addresses the main areas illustrated in the figure given below. The first is the objective to please the customer, an objective that has been in place since the mid-1980s, but which nonetheless, Texas Instruments(TI) found challenging and frustrating to relate to its 14000 people at 10 work places.

The second main area comprises improvement thrusts generated as a result of TI’s application for the Baldrige Award in 1990. When TI entered the contest, management believed TI was already good, being the first and second in its markets. What shocked them was that the Baldrige report indicated 89 areas in need of improvement. Most of these areas now serve as a road map for changes needed and as an aid to developing the improvement thrusts.

The third area is performance metrics, the way TI sets goals and measures progress across the organization. Part of TI’s measurement success has been its employee’s ability to answer questions such as
•    Who are my customers
•    How do I know when I have pleased them?
•    What is my error rate?
•    What is my personal training plan?
•    What am I going to do to improve my job?



To drive quality from the top, TI established a quality improvement team(QIT) of top managers that meets every week to discuss quality issues. From QIT meetings, management learned it is important to share all information with employees, even information previously considered confidential or for management only. Management must try to foster an environment where employees feel empowered, free to offer opinions, and part of the continuous improvement team. The president now makes site visits once a week and talks to employees.

TI also learned from Baldrige application the importance connectivity. For example, TI now bases its human resources initiatives on five areas from the Baldrige human resource category.

•    Planning & Management
•    Employee Involvement
•    Education and training
•    Performance and recognition
•    Well-being and satisfaction.

TI named members of the QIT to oversee each of the initiatives in each of these categories and included them on its management team to encourage cross-functional planning and coordination.

Though TI has long had a team culture, the emphasis is on self-directed and self-managed teams. These new teams are intended to significantly reduce the number of levels of management in the organization.
In 1990 TI was averaging 3 days of training per person and about 25% of the workers had less than a day of training. Management thought this was OK until it looked at Motorola, which had a minimum of 40 hours and an average of 80 hours of training. TI management set a goal of a minimum 2 days training for every employee, with an increase of 1 day a year.

The key to employee development and quality improvement, TI management believes, is to lead by example. So management decided to attend the training first; this they believed would send a strong message to everyone about the importance of training. Management also decided it would set for itself twice the level of whatever training goal it set for employees to send the message that TI is a learning organization and everyone learns as a team.

Says Mike Cooney, Vice President and Manager, Quality Assurance, “The whole TQM program is driven by our need to sustain our competitive edge. We ask ourselves regularly whether what we are doing will give us sustained competitive advantage and satisfy our customers”.


Case Questions:

a)     Explain how emphasis on Quality improves the productivity of the manufacturing activity.

b)     Explain the process of TQM.

c)     Explain how customer satisfaction is achieved through training.

d)     Explain how to understand that the strategy being adopted on Quality is delivering the results.

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DOM05
SUPPLY CHAIN MANAGEMENT
Assignment – I

Assignment Code: 2017DOM053B1                                            Last Date of Submission: 15th November 2017
                                                    Maximum Marks: 100
Section-A
Each question carries 25 Marks.
1.     "There are many possible structures for supply chain, but the simplest view has materials converging on an organisation through tiers of suppliers and products diverging through tiers of customers." Elaborate.
2.     Why is the location of warehouse important for the SCM? Discuss some methods for determining the location of the warehouse
Section-B (50 Marks)
Case Study

A manufacturer of cookware, bake ware, dinnerware and household tools made a series of changes in their supply chain network as a result of both organic growth and growth through acquisitions. The changes included the number and location of manufacturing operations, the number and location of distribution centers and the reconfiguration of the company’s customer base (mass merchants, department stores, specialty retailers and online businesses).

The management of the company concluded that to achieve the optimal supply chain network from the perspective of cost and service performance, the entire network needed to be redesigned. To do so, a special project team was then commissioned to manage the network redesign internally and Establish was engaged to create the new redesigned network.

The Solution Establish developed a project methodology based on the project objective and scope and the firm’s experience (30+ years) and judgment. The methodology was multi-stepped. Establish also selected a best-in-class network modeling tool to use for the work required.

The first step in the methodology was for the manufacturer’s project team and the Establish team to meet to structure the project work, refines the project scope, develop planning factors and identify key contacts at the major locations and the sources for the data that would need to be gathered.

Second, site visits were scheduled to observe a number of the manufacturer’s operations so that Establish would develop an understanding of current network to include the product groups in the network, their storage and shipping characteristics and requirements, customer’s service requirements, current issues, etc.

Note: From these visits several quick fix opportunities were identified and implemented immediately. Implementation of these opportunities actually yielded benefits that offset the project costs.

 Third, the data was gathered and analyzed, and developed as necessary to reflect the operation of the current supply chain. Progress meetings were scheduled to validate the data against the actual supply chain costs.

 Fourth, a validation model run was prepared to confirm the accuracy of the model. Then, a 5- year forecast was applied to the validation model to create a model Baseline.

Fifth, a number of alternative scenarios were modelled to identify the optimal supply chain network. The alternative supply chain network scenarios were compared to the baseline. The overall best supply chain network, from the prospective of cost and service performance, was identified and then it was evaluated for practicality. Minor location adjustments were made, a few product groups were shifted and the completed result was the redesigned optimal supply chain network.

A business case was prepared for this redesigned optimal supply chain network and in it more than a 10 percent reduction in annual supply chain operating costs were identified along with improvements in customer’s service performance. In addition, the redesigned network had a simpler configuration and it was easier to manage.


Case Questions:

a)     Express your opinion about the manufacturer’s strategies?

b)     How far the progress meetings mentioned in the case study are necessary?

c)     According to you, is there any need to redesign entire network for efficient service?
























DOM05
SUPPLY CHAIN MANAGEMENT
Assignment – II

Assignment Code: 2017DOM05B2                                              Last Date of Submission: 15th November 2017
                                                    Maximum Marks: 100
Section-A
Each question carries 25 Marks.
1.     What is Benchmarking? Taking an organization of your choice explain how benchmarking has helped improve his supply chain

2.     "In the era of outsourcing, third party logistics can add value to existing supply chains." Explain this statement with examples.

Section-B (50 Marks)
Case Study
Kozmo, the online convenience store to shut down
New York-based Kozmo, the 3-year-old company announced that it would stop delivery service in all nine cities it operates. New York-based Kozmo, which dispatched legions of orange-clad deliverymen to cart goods to customers' doors, is the latest dot.com dream to evaporate in the market downturn. Amazon com, venture capital firm Flatiron Partners and coffee giant Starbucks were among the investors in Kozmo.
Kozmo said in December that investors promised a total of $30 million in private funding. But last month the company learned that an investor had backed out of a $6 million commitment. Kozmo executives had been working on a merger deal with Los Angeles-based PDQuick, another online grocer, sources said. The deal collapsed when funding that was promised to PDQuick did not materialize. Sources said Kozmo still has money but decided to close now and liquidate to ensure that employeesc ould receive a severance package.
Just last month, Kozmo Chief Executive Gerry Burdo was upbeat about Kozmo's future, saying he was looking to steer Kozmo away from its Internet-only business model and toward a "clicks and bricks" approach. But some analysts say Kozmo's business model only made sense in the context of a densely packed city such as New York. Vern Keenan, a financial analyst with Keenan Vision, said the service had a chance to work in only a few other cities around the world, such as Lonclon, Stockholm or Paris. "This seemed like a dumb idea from the beginning," Keenan said. "This grew out of a New York City frame of mind and it simply didn't translate."
Kozmo was started by a pair of twenty-something former college roommates. They got the idea for the company on a night when they craved videos and snacks and wished a business existed that would deliver it to them. Kozmo offered free delivery and charged competitive prices when it launched in New York. Though customers loved the service, the costs of delivery were high.
After co-founder and former Chief Executive Joseph park stepped down, Burdo slashed Kozmo's overhead, instituted a delivery fee and oversaw several rounds of layoffs. The company also closed operations in San Diego and Houston. Burdo said last month that profitability was not far away. The company had reached a milestone last December when it reported profits at one of its operations for the first time. Kozmo later saw two more operations reach profitability as a result of brisk holiday business.
Online delivery companies have been among the most ravaged by the Internet shakeout. Kozmo's rival in New York, Urbanfetch, shuttered its consumer operations last fall. Online grocers such as Webvan and Peapod have also struggled, and smaller operations such as Streamline.com and ShopLink.com have dosed down. Peapod was days away from closing last year when Dutch grocer Royal Ahold agreed to take a majority stake.
From the very beginning, supply chain management was to be a core competency of Kozmo. The promising dot.com would deliver your order everything from the latest video to electronics equipment in less than an hour. The technology was superior, the employees were enthusiastict, and the customers were satisfied. But eventually, Kozmo ran out of time and money.
Case Questions:
 (a)     What, in your opinion, is the major reason for the failure of Kozmo?
(b)     Do you think that Kozmo promised what its supply chain could not bear? What could have prevented its shut-down?

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DOM03
PROJECT MANAGEMENT
Assignment – I

Assignment Code: 2017DOM03B1                                 Last Date of Submission: 15th November 2017
                                                    Maximum Marks: 100
Section-A
Each question carries 25 Marks.
1.       a.      What   are some of  the key environmental forces that have changed the way projects?
are managed? What are the effects of these forces on the management of projects?

b.    What do you understand by the term Demand Forecasting? Enumerate various methods
of demand forecasting. How are you going to cope up with the uncertainties in demand forecasting?

2.    a.    Why it is important to assess the culture of an organization before deciding what project
management structure should be used to complete a project ‐ Discuss.
b.    What considerations go in for a project to be taken as a part of The Functional Organization, The Pure Project Organization and The Matrix Organization? Explain their advantages & disadvantages.

Section-B (50 Marks)
Case Study

Apache Metals is an original equipment manufacturer of metal working equipment. The majority of Apache's business is as a supplier to the automotive, appliance, and building products industries. Each production line is custom designed according to application, industry, and customer requirements.

Project managers are assigned to each purchase order only after the sales department has a signed contract. The project managers can come from anywhere within the company. Basically, anyone can be assigned as a project leader. The assigned project leaders can be responsible for as many as ten purchase orders at one time.

 In the past, there has not been enough emphasis on project management. At one time, Apache even assigned trainees to perform project coordination. All failed miserably. At one point, sales dropped to an all-time low, and cost overruns averaged 20--25 percent per production line.

 In January 1997, the Board of Directors appointed a new senior management team that would drive the organization to excellence in project management. Project managers were added through recruitment efforts and a close examination of existing personnel. Emphasis was on individuals with good people and communication skills.





The following steps were implemented to improve the quality and effectiveness of the project management system:

•     Outside formal training for project managers.
•     Development of an apprenticeship program for future project manager.
•    Modification of the current methodology to put the project manager at the focal point
•    involvement of project managers to a greater extent with the customer


Case Questions:

1.    What problems can you see in the way project managers were assigned in the past?
2.    Will the new approach taken in 1997 put the company on a path to excellence in project management?
3.    What skill set would be ideal for the future project managers at Apache Metals?
4.    What overall cultural issues must be considered in striving for excellence in project management?
5.    What time frame would be appropriate to achieve excellence in project management? What assumptions must be made?

DOM03
PROJECT MANAGEMENT
Assignment – II

Assignment Code: 2017DOM03B2                                 Last Date of Submission: 15th November 2017
                                                    Maximum Marks: 100
Section-A
Each question carries 25 Marks.
1.    a.     “Cost   of   a   project  represents the total of all items of outlay associated with a project
which are supported by long-term funds”? List and briefly describe these items.  

b.    Discuss   the   application of capital asset pricing model (CAPM) to the calculation of cost
of equity? Discuss the factors affecting the weighted average cost of capital (WACC).   

2.    a.    Describe various components which make up working capital requirement.
b.    Discuss broad sources of finance available for project financing.   

Section-B (50 Marks)
Case Study

Rocket Aerial Target System (RATS)

An introduction to the RATS project is found at the beginning of Chapter 10.

Bill Williams immediately called a staff meeting of his key people to get their ideas on proceeding with the project. It was generally agreed that this was a piece of business the operation should pursue. The question was: How could the operation go after this new business and still successfully produce and deliver its other products? It was conceded that the new business was so important that if the key personnel were satisfied with what they heard from marketing tomorrow, an all out effort should be expended to win the contract.

The meeting the next morning resolved most of the operation's questions. Ivor Kaney informed Williams that Corporate was so impressed with the prospects of RATS that the operation had Corporate's approval to spend up to a half million dollars in securing the contract, a very high trust, and high priority allotment. All the department heads agreed that some sacrifice would have to be made by them to succeed in this new effort. Each of them would be asked to give up one or two key employees to serve on the project team. Williams decided to commit the operation to an all out effort on the project.

The next day the project team was announced:

Project manager—Cris Jacobs, a young recent MBA with an undergraduate degree in management. She was selected because she was perhaps the best administrator in the operation and she had great rapport with the other units of the company.

Flight engineer—Jim Sherry, head of quality assurance/propulsion.

System design specialist—Roberto Mendez, expert design engineer, brilliant development specialist.

Production engineer—Jim Dawson, production manager of the propulsion generator department.

Safety and security officer—Inez Thompson, director of loss prevention.

Cost engineer—Wallace Potter, industrial engineer.

These individuals would be assigned to the project full time for its duration. If the contract were won, all of them would carry their knowledge about RATS back to their home departments, thus aiding in the conversion from development to production.

Rocket Aerial Target System (RATS)  Continued

The team developed the following list of project activities, time estimates, and precedence relationships as part of the project plan:
                                                       Estimated
                                                        Time To
                                           Immediate    Complete
                                           Predecessor  Activity
Activity                                   Activities)   (Weeks)
─────────────────────────────────────────────────────────────────
Product Development
a. Preliminary propulsion design                --         4
b. Preliminary flight system design             --         5
c. Static tests A                                a         2
d. Propulsion design modifications               c         2
e. Static tests B                                d         2
f. Flight tests A                                b         3
g. Flight system design modifications           e,f        3
h. Flight tests B                                g         3
i. Demonstration to customer                     h         2

Bid Package
j. Material and component costs                 e,f        6
k. Labor and overhead costs                     e,f        6
l. Processing of bid package through company    j,k        2
m. Delivery of bid package to customer           l         1
════════════════════════════════════════════════════════════
Case Questions:

1.    Draw a CPM network for the project.

2.    Use the CPM computer program in the POM Software Library, to develop a CPM analysis of the project. What is the estimated duration of the project? What activities are on the critical path?


3.    How long would the project take to complete if Activity b were delayed 2 weeks? How long would the project take to complete if Activity f were delayed 2 weeks? How long would the project take to complete if both Activities b and f were delayed 2 weeks? Discuss the care that must be taken in interpreting the meaning of the activity slack values.

4.    Explain how the project would be affected if some resources could be shifted to Activity j and that activity's duration was reduced by 1 week.

5.    Discuss how the assumptions and criticisms of CPM should cause us to modify our interpretation of our analysis of the RATS project.