Exam 11: Spreadsheet Modeling and Analysis

Use the table below to answer the following question(s). Dresden Pharmaceuticals has decided to go ahead and start clinical trials on a potential new drug. The total R&D costs are estimated to reach around $875,000,000 with clinical trials mounting to $145,000,000. The current market size is estimated to be around 3,000,000 and is expected to grow at 4 percent every year. The market share Dresden hopes to capture in the first year is 7 percent, and is projected to grow by 25 percent each year for the next 4 years. A monthly prescription is anticipated to generate revenue of $420 while incurring variable costs of $150. A discount rate of 8 percent is assumed. $\begin{array} { | l | l | } \hline \text { Dresden Pharmaceuticals } & \\\hline & \\\hline \text { Data } & \\\hline & \\\hline \text { Market Size } & 3,000,000 \\\hline \text { Unit (monthly Rx) revenue (\$) } & 420 \\\hline \text { Unit (monthly Rx) cost (\$) } & 150 \\\hline \text { Discount Rate (per cent) } & 8 \\\hline & \\\hline \text { Project Costs } & \\\hline \text { R\&D (\$) } & 875,000,000 \\\hline \text { Clinical Trials (\$) } & 145,000,000 \\\hline & \\\hline\end{array}$ -Calculate the market share percentage in the third year.

Give an account of how the design and format of spreadsheets can be improved.

Use the table below to answer the following question(s). Dresden Pharmaceuticals has decided to go ahead and start clinical trials on a potential new drug. The total R&D costs are estimated to reach around $875,000,000 with clinical trials mounting to $145,000,000. The current market size is estimated to be around 3,000,000 and is expected to grow at 4 percent every year. The market share Dresden hopes to capture in the first year is 7 percent, and is projected to grow by 25 percent each year for the next 4 years. A monthly prescription is anticipated to generate revenue of $420 while incurring variable costs of $150. A discount rate of 8 percent is assumed. $\begin{array} { | l | l | } \hline \text { Dresden Pharmaceuticals } & \\\hline & \\\hline \text { Data } & \\\hline & \\\hline \text { Market Size } & 3,000,000 \\\hline \text { Unit (monthly Rx) revenue (\$) } & 420 \\\hline \text { Unit (monthly Rx) cost (\$) } & 150 \\\hline \text { Discount Rate (per cent) } & 8 \\\hline & \\\hline \text { Project Costs } & \\\hline \text { R\&D (\$) } & 875,000,000 \\\hline \text { Clinical Trials (\$) } & 145,000,000 \\\hline & \\\hline\end{array}$ -Calculate the projected sales for the first year.

Identify different business uses for statistics and the major statistical tools businesses use Use the table below to answer the following question(s). Sujito Electronix makes headphones for $22 and sells them for $32. Sujito has sold at least 50 headphones on average per week in the past, though the actual demand is unknown. Sujito has also often run short of supply in the past. After three months of release, the headphones are sold at 40 percent discount. The spreadsheet below shows Sujito's sales and demand for the headphones. We take demand at 51, and quantity produced at 55. Newsvendor model for Sujito's headphones Data Selling Price \ 32 Cost \ 22 Discount Price \ 19.2 Model Demand 51 Produced Quantity 55 Quantity Sold Surphus Quantity -Which of the following is the value for quantity sold?

Use the table below to answer the following question(s). Dresden Pharmaceuticals has decided to go ahead and start clinical trials on a potential new drug. The total R&D costs are estimated to reach around $875,000,000 with clinical trials mounting to $145,000,000. The current market size is estimated to be around 3,000,000 and is expected to grow at 4 percent every year. The market share Dresden hopes to capture in the first year is 7 percent, and is projected to grow by 25 percent each year for the next 4 years. A monthly prescription is anticipated to generate revenue of $420 while incurring variable costs of $150. A discount rate of 8 percent is assumed. $\begin{array} { | l | l | } \hline \text { Dresden Pharmaceuticals } & \\\hline & \\\hline \text { Data } & \\\hline & \\\hline \text { Market Size } & 3,000,000 \\\hline \text { Unit (monthly Rx) revenue (\$) } & 420 \\\hline \text { Unit (monthly Rx) cost (\$) } & 150 \\\hline \text { Discount Rate (per cent) } & 8 \\\hline & \\\hline \text { Project Costs } & \\\hline \text { R\&D (\$) } & 875,000,000 \\\hline \text { Clinical Trials (\$) } & 145,000,000 \\\hline & \\\hline\end{array}$ -Calculate the net present value for Dresden's new drug.

Which of the following formulas are used to calculate the In-house recording cost?

Which of the following conditions is the optimal solution to the newsvendor problem, where Q is the quantity to be purchased, and D is demand?

Use the table below to answer the following question(s). In the spreadsheet below, there is data on the price, cost, demand, and quantity produced for an item. There are also different "what if" values that can help a manager to calculate costs and revenue with variability in demand. $\begin{array}{|l|l|l|l|}\hline & \text { A } & \text { B } & \text { C } \\\hline 1 & \text { Profit Model } & & \\\hline 2 & & & \\\hline 3 & \text { Data } && \begin{array}{l}\text { What-If } \text { Demand } \\\text { Values }\end{array} \\\hline 4 & & & 20,000 \\\hline 5 & \text { Unit Price (\$) } & 50 & 40,000 \\\hline 6 & \text { Unit Cost (\$) } & 25 & 55,000 \\\hline 7 & \text { Fixed Cost (\$) } & 550,000 & 60,000 \\\hline 8 & \text { Demand } & 60,000 & 65,000 \\\hline 9 & \text { Quantity Produced } & 55,000 & \\\hline 10 & & & \\\hline\end{array}$ -From the "what if" values, calculate the total profit when the demand is 20,000.

Use the table below to answer the following question(s). In the spreadsheet below, there is data on the price, cost, demand, and quantity produced for an item. There are also different "what if" values that can help a manager to calculate costs and revenue with variability in demand. $\begin{array}{|l|l|l|l|}\hline & \text { A } & \text { B } & \text { C } \\\hline 1 & \text { Profit Model } & & \\\hline 2 & & & \\\hline 3 & \text { Data } && \begin{array}{l}\text { What-If } \text { Demand } \\\text { Values }\end{array} \\\hline 4 & & & 20,000 \\\hline 5 & \text { Unit Price (\$) } & 50 & 40,000 \\\hline 6 & \text { Unit Cost (\$) } & 25 & 55,000 \\\hline 7 & \text { Fixed Cost (\$) } & 550,000 & 60,000 \\\hline 8 & \text { Demand } & 60,000 & 65,000 \\\hline 9 & \text { Quantity Produced } & 55,000 & \\\hline 10 & & & \\\hline\end{array}$ -Calculate the variable cost when the demand is 60,000 units.

Use the table below to answer the following question(s). Sheila joined Simsin Tradings at the age of 36 with a starting salary of $75,000. She expects a salary increase of 5 percent every year. Her retirement plan requires her to pay 9 percent of her salary, while the company matches it at 32 percent. She expects an annual return of 7 percent on her retirement portfolio. Using a predictive model for Sheila's first five years, calculate the following, assuming that the salary increases at the same rate every year, and the return of interest does not change. Retirement Plan Model for Sheila Data Retirement Contribution (percent of salary) 9 percent Employer Match 32 percent Annual Salary Increase 5 percent Annual Return on Investment 7 percent -What will be Sheila's salary in her second year of work at Simsin?

Two-way data tables can evaluate only one output variable.

Brenton joined the Kroos Corporation at a starting salary of $61,500. According to the company's retirement plan, Brenton has to make a retirement contribution of 6 percent of his salary. The company contributes 30 percent of this amount. Brenton is expected to receive a salary increment of 3.5 percent per year for the next three years. Brenton is also expected to receive an annual investment return of 8 percent on the plan. Assuming the same rate of salary increases and investment returns each year, calculate the total balance of the retirement plan in its second year.

Troista Mobile Accessories sells mobile apps on their Web site. If a customer spends on average, $12 per visit and visits the Web site 20 times each year, what is the average nondiscounted gross profit during a customer's lifetime? Given that Troista makes a margin of 60 percent on the average bill, with 25 percent of customers not returning each year.

Use the table below to answer the following question(s). Below is a room overbooking model spreadsheet for the Metza, a hotel chain. The hotel has 425 rooms priced at $180 per day each, and is usually fully booked. Reservations can be cancelled any time before 5:00 p.m. with no penalty. The hotel estimates an average overbooking cost of $150. Customer demand is set at 400 with an average cancellation of 20. A B 1 Hotel Overbooking Model for the Metza group of hotels 2 3 Data 4 5 Rooms Available 425 6 Price per room \ 180 7 Overbooking Cost \ 150 8 9 Model 10 11 Reservation Limit 425 12 Customer Demand 400 13 Reservation Made 14 Cancellations 20 15 Customer Arrivals 16 Overbooked Customers -Calculate the net revenue.

Blue Sunset Band is planning to record a new album. A major decision to be made is if the band can record the album on their own, or if they should hire a studio to record it with. The fixed cost for recording at the studio is $100,000, plus the manufacturing cost per CD, which is at $5. If they record the album in-house, the cost per CD is $10. They plan to produce 3000 copies of the album regardless of the place of recording. If the band wished to break even with the cost, how can they achieve this by using the Goal Seek feature in Excel? A B 1 The Blue Sunset Band Album Recording Decision 2 3 Data 4 5 Recording at Studio 6 Fixed Cost \ 100,000 7 Unit CD Cost \ 5 8 9 Recording In-house 10 Unit CD Cost \ 11 12 Production Volume 3000 13 14 Model 15 16 Total studio manufacturing cost \ 115,000 17 Total in-house manufacturing cost \ 30,000 18 19 Cost Difference \ 85,000 20 Recording Decision In-house

In the equation to calculate the economic value of a customer, V = R × F × M / D, how is the value for F estimated?

Which of the following years shows the first profit for Dresden's new drug?

Use a modern software tool to perform statistical calculations. Using the spreadsheet below to answer the following question(s). The spreadsheet below shows the net income model for a company that sells shoes. A B 1 Net Income Model 2 3 Data 4 5 Sales \ 10,000,000 6 Cost of Goods Sold \ 6,400,000 7 Administrative Expenses \ 500,000 8 SellingExpenses \ 900,000 9 Depreciation Expenses \ 750,000 10 Interest Expenses \ 70,000 11 Taxes \ 620,000 12 13 Model 14 15 Gross Profit \ 3,600,000 16 Operating Expenses \ 2,150,000 17 Net Operating Income \ 1,450,000 18 Eamings Before Taxes \ 1,380,000 19 20 Net Income -Which of the following formulas would be used to calculate the operating expenses?

Use a modern software tool to perform statistical calculations. Using the spreadsheet below to answer the following question(s). The spreadsheet below shows the net income model for a company that sells shoes. A B 1 Net Income Model 2 3 Data 4 5 Sales \ 10,000,000 6 Cost of Goods Sold \ 6,400,000 7 Administrative Expenses \ 500,000 8 SellingExpenses \ 900,000 9 Depreciation Expenses \ 750,000 10 Interest Expenses \ 70,000 11 Taxes \ 620,000 12 13 Model 14 15 Gross Profit \ 3,600,000 16 Operating Expenses \ 2,150,000 17 Net Operating Income \ 1,450,000 18 Eamings Before Taxes \ 1,380,000 19 20 Net Income -Which of the following would be used to calculate the gross profit?

Use the table below to answer the following question(s). Below is a room overbooking model spreadsheet for the Metza, a hotel chain. The hotel has 425 rooms priced at $180 per day each, and is usually fully booked. Reservations can be cancelled any time before 5:00 p.m. with no penalty. The hotel estimates an average overbooking cost of $150. Customer demand is set at 400 with an average cancellation of 20. A B 1 Hotel Overbooking Model for the Metza group of hotels 2 3 Data 4 5 Rooms Available 425 6 Price per room \ 180 7 Overbooking Cost \ 150 8 9 Model 10 11 Reservation Limit 425 12 Customer Demand 400 13 Reservation Made 14 Cancellations 20 15 Customer Arrivals 16 Overbooked Customers -Calculate the customer arrivals at the Metza.