Suppose that GLC earns a $2,000 profit each time person buys a car. We want to determine how the expected profit earned from a customer depends on the quality of GLC’s cars. We assume a typical customer will purchase 10 cars during her lifetime. She will purchase a car now (year 1) and then purchase a car every five years-during year 6, year 11, and so on. For simplicity, we assume that Hundo is GLC’s only competitor. We also assume that if the consumer is satisfied with the car she purchases, she will buy her next car from the same company, but if she is not satisfied, she will buy her next car from the other company. Hundo produces cars that satisfy 80% of its customers. Currently, GLC produces cars that also satisfy 80% of its customers. Consider a customer whose first car is a GLC car. If profits are discounted at 10% annually, use simulation to estimate the mean value of this customer to GLC. Round your answers to the nearest dollar. s 2000 Also estimate the mean value of a customer to GLC if it can raise its customer satisfaction rating to 85%, to 90%, or to 95%. You can interpret the satisfaction value as the probability that a customer will not switch companies. Satisfaction rating Customer value to GLC 85% X 104.76 90% 103.80 95% 104.76

For each of the following – please write a brief description of how an economic utility is demonstrated as it relates to concepts found in Chapter One of the textbook. Embedded hyperlinks provide some reference.

1. United Parcel Service (UPS) is a giant in the logistics world. They not only operate storage/distribution centers and transportation fleets; they also operate local stores throughout the United States. How does possession utility apply to UPS Stores?

2. Some online shoppers can elect to pick up their products at a retail store associated with the website. For instance the outdoor retailer, REI, gives customers free shipping if they pickup their online purchase at one of their “brick & mortar” stores. How does place utility apply to REI Store Pickup?

3. Charlotte Area Transit System (CATS) adjusts the number of trains they have in operation on the Blue Lynx Line. If there’s a Panther’s home game or during rush hour commuting – they may add additional trains. How does time utility apply to adjusting the number of CATS trains?

4. Combat rations provided to US military service members are manufactured by Americqual who produces a variety of meal options. How does form utility apply to the types of combat rations available to American warfighters?