Background
Waste One is one of a small handful of providers of waste collection services in the metropolitan area of Marianapolis, a large city in the U.S. Pacific Northwest. There are over 200 independent municipalities within the metropolitan area of Marianapolis, each of whom choose their own waste collection provider. Waste One prides itself on being the more comprehensive waste collection company. Their service includes curbside collection of waste and recycling and they offer a version of unit-based pricing, where residents choose from one of two container sizes for their trash. Residents can choose to pay a monthly fee for a 50-gallon container, or a larger monthly fee for a 96-gallon container. Thus, in addition to competing to obtain contracts with specific municipalities, Waste One essentially has two products its customers can choose from (recycling collection is always included at no extra cost). Meanwhile, their main competitor, Dumpke, only collects trash curbside and does not collect recycling. Dumpkeâs service requires customers to use their own trash cans, but has no limit on the amount of trash collected. Waste One tends to attract municipalities that are wealthier and more concerned about the environment.
Management Directives
The Board of Waste One wants to evaluate the pricing strategy for the monthly rate on the 96-gallon container. Waste One has much higher margins on the 96-gallon container, as the additional cost for this container versus the 50-gallon container is minimal (small increase in the fees paid to the dump). However, the Board is concerned that it must also keep the price of the 50-gallon container somewhat close to the price of the 96-gallon container to keep customers from choosing the cheaper (lower margin) option. You are given the attached data and variable definitions, along with the knowledge that the firm has $550,000 in monthly fixed costs. You are then asked to determine the monthly rates that will maximize profit for Waste One. This will require estimating demand and cost functions and making some assumptions. The following issues/questions should be addressed within your executive report and presentation.
- What is your recommended monthly price for the 96-gallon container and what do you expect Waste Oneâs monthly profit to be in this scenario?
a. If this monthly price is consistent with historical prices, explain why the board should accept your recommendation of only minor change.
b. If this monthly price is not consistent with historical prices, explain why the board should accept your recommendation of radical change.
- Explain the process you went through to determine your demand function.
a. Provide rationale for each of the variables included in the demand function.
b. Explain whether the coefficient estimates are statistically significant and whether the sign on the coefficient estimates are what you expected.
- Provide rationale for all of the assumptions that were made to determine the appropriate monthly rates.
- Explain what changes could occur over the next year that would alter your recommended prices.
- Do you agree with the boardâs decision focus on the monthly price for the 96-gallon container and to keep the price of the 50-gallon container somewhat close to the price of the 96-gallon container? Explain your rationale and provide suggestions if you disagree.
Sample Solution
Gatehouse can likewise be supplanted with computerized gantry that enables trucks to move all through the yard with less trouble. The terminal administrator can introduce some sort of a framework that can see through the trucks for security reason. That will decrease the work of staff for the activity and furthermore diminish the trusting that trucks will get in and out of the yard. A few nations have rail framework where it will transport holders starting with one spot then onto the next spot utilizing railroads. Presently with more compartments coming in the port, the framework must be revised for a guide to utilize twofold stack or triple stack high on rail. With this sort of framework, it can convey in any event double the typical no. of holders being transported by rail. Turnaround time Clearly the ship’s turnaround time would be slower for expansive vessels like Malaccamax. Consequently it is the ports’ exchanging speed that will pull in ship proprietors to get any administrations required. Ports should remain aggressive particularly when taking care of vast vessels like Malaccamax since very few ports have the capacity to manage it. Holder taking care of supplies will affect the turnaround time. To lessen it, support of the types of gear should be in a normal premise with the goal that the productivity is kept up at an abnormal state. To utilize extra cranes or quicker derrick paces and trolleys can limit the limitation in port. IT The devastating of the port need not be through the annihilation of physical resourcesâit can likewise happen through the disturbance of the data frameworks controlling port stream. Just a refined data organize the executives framework can enable the port to deal with the volumes and unpredictability of taking care of various cargoes at the same time.>
Gatehouse can likewise be supplanted with computerized gantry that enables trucks to move all through the yard with less trouble. The terminal administrator can introduce some sort of a framework that can see through the trucks for security reason. That will decrease the work of staff for the activity and furthermore diminish the trusting that trucks will get in and out of the yard. A few nations have rail framework where it will transport holders starting with one spot then onto the next spot utilizing railroads. Presently with more compartments coming in the port, the framework must be revised for a guide to utilize twofold stack or triple stack high on rail. With this sort of framework, it can convey in any event double the typical no. of holders being transported by rail. Turnaround time Clearly the ship’s turnaround time would be slower for expansive vessels like Malaccamax. Consequently it is the ports’ exchanging speed that will pull in ship proprietors to get any administrations required. Ports should remain aggressive particularly when taking care of vast vessels like Malaccamax since very few ports have the capacity to manage it. Holder taking care of supplies will affect the turnaround time. To lessen it, support of the types of gear should be in a normal premise with the goal that the productivity is kept up at an abnormal state. To utilize extra cranes or quicker derrick paces and trolleys can limit the limitation in port. IT The devastating of the port need not be through the annihilation of physical resourcesâit can likewise happen through the disturbance of the data frameworks controlling port stream. Just a refined data organize the executives framework can enable the port to deal with the volumes and unpredictability of taking care of various cargoes at the same time.>
