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A few years ago, Amazon has introduced Amazon Hub Locker system for more convenient and secure deliveries to customers. In certain public stores such as Whole Foods in this problem, they installed lockers for their Prime deliveries. When customers request to have their Prime orders delivered to Hub Locker, then the products are delivered to a Whole Foods store. When there are available lockers, then the orders will directly be stored in lockers and customers are notified with secure codes, so that they can find their deliveries while they are shopping. When there are no available lockers, then the products will be kept in some space at the store. As soon as there is an available locker, they will be moved to one of the lockers.

Consider a Whole Foods store where 50 lockers are installed, and suppose that the Hub Locker requests (i.e., orders to be delivered in Hub Locker) arrive with a Poisson process with a rate ? = 120 per day. Suppose that when a customer is notified that their orders are stored in Hub Locker, then the time it takes to pick up their orders is exponentially distributed with mean 8 hours.

1. Explain that the Hub Locker system can be modeled as an M/M/s queue. What is the “server,” and how are service times modeled? Specify the parameters ?, µ, and s that can be used for analyzing this system via Q.xls.

2. What is the average delay, defined as the average time between when a product is arrived to the Whole Foods store and when it is moved to one of the lockers?

3. What is the average number of orders that are arrived to the store but not stored in the lockers?

4. What is the probability that an order will not experience the delay, i.e., it will directly be stored to one of the lockers?

5. Suppose that the service becomes more popular and the rate ? is increased to 135 per day. If you would like to meet a service requirement that the proportion of orders which experience the delay is less than 10%, how many additional lockers are needed?

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Records of the Genesis Corporation reveal the following information about inventory during the year.

The company’s accountant is trying to decide whether to determine Cost of Goods Sold using the perpetual inventory system (calculating Cost of Goods Sold after every sale) or the periodic inventory system (calculating Cost of Goods Sold at the end of the year only). Assume the company uses the LIFO method for inventory costing.

Required Using the information given above, answer each of the following questions.

A. How many units have been sold? How many units remain in ending inventory?

B. What is Cost of Goods Sold using the perpetual method? The periodic method? What is the cost of ending inventory for each method?

C. Is there a difference in net income for each method? Why? (Assume for purposes of this question that Sales Revenue is 85,000 and all other expenses are 5,600.)

D. What are the advantages of using perpetual? Using periodic?

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CASE 8.1-The Trade Show

Judy had just accepted a position as a sales representative with NewLine Papers, a manufacturer of high-quality specialty papers for businesses that use direct mail to promote their products and services. Typically, such companies must use paper that is attractive to look at and hold that absorbs ink quickly because of high-speed printing, and that can stand up to the rigors of automatic folding equipment. For Judy to learn more about the business and to acquire good leads, her sales manager has sent her to the U.S. Postal Forum (USPF) annual meeting in Las Vegas. Judy decided that for this trip to pay off in terms of generating solid leads, she needed to engage in careful planning. A quick check of USPF’s website allowed her to compile a shortlist of attendees who might be interested in NewLine’s latest product. About a week before the trade show, she phoned a couple of them to arrange an appointment. They willingly agreed, so she flew to Las Vegas in the hope that she could snag an order, not just a couple of good leads. That would surely impress her manager! After checking in at the convention hotel, Judy called Ned Harris, her first appointment for the next morning. Ned wasn’t in, but she left a message indicating that she could meet him just off the lobby at 10:00 a.m. Her second appointment, Anita Scoby, answered on the second ring. She and Judy agreed to meet tomorrow afternoon at 2:30 following the keynote speech by the head of the U.S. Environmental Protection Agency. Everything was all set. Ned arrived for their meeting the next morning a couple of minutes late, explaining that he was not a morning person and needed a second cup of coffee. They moved to the hotel’s coffee bar and settled at a small table. Judy brightened when Ned reported that his company had done business with NewLine some years before. Immediately, Judy pulled out a couple of samples from her briefcase and launched into her presentation of the outstanding features of the new product. Ned listened attentively, sipping his coffee, and sitting with arms folded. When Judy finished her spiel, she asked if he had any questions. He didn’t. She then asked whether Ned’s company would be interested in placing a trial order. He replied, rather curtly, that he didn’t know and would have to get back to her on that. He added that he was late for another meeting. With that he picked up his newspaper and left, leaving Judy to reflect on what had happened. Her meeting that afternoon with Anita Scoby was even briefer. Before Judy could begin to describe the samples, Anita cut her off, explaining that she had no authority to engage in such discussions. She added that while she was interested in Judy’s product, her role was in sales for her company and that she was attending the trade show merely to network with other clients. She wished Judy luck and promised to pass along Judy’s information to more appropriate people at her firm. As Judy flew home the next morning, she wondered what she had done wrong. She had researched attendees of the trade show and had obtained appointments, but she was returning home with no orders and worse, no real leads. Where do you think Judy went wrong? What would she need to do to become a “master prospector?” If you were sent to the trade show by your manager, what would you have done? What would have been your objectives? Which tactics would you have employed to fulfill those objectives?

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Location, location, location can be the most important aspect to a business. Why? Where can your customers go to find you and your business? On the web? On a social media site? In a brick and mortar location? Where would you seek to be found with your ficticious business? Why do most entrepreneurs start out of their home? Amazon, HP, Dell, Uber began in the garage or in a dorm room. What are the benefits? Negatives? Can you do that with your business? Recognizing that many entrepreneurs are between 30-40 years old and employed full time, how do you go about creating your own business when you are employed and caring for a spouse or children? Can your home be a major distraction for you?

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