Payoff Matrix for VISA

2. Payoff Matrix for VISA VISA AMERICAN EXPRESS’ MARKETING RESPONSE STRATEGY (IN MILLIONS OF $) CA1 CA2 CA3 S1 13 14 11 S2 9 15 18 S3 24 21 15 S4 18 14 28 Exhibit QM–1

3. Regret Matrix for VISA VISA AMERICAN EXPRESS’ MARKETING RESPONSE STRATEGY (IN MILLIONS OF $) CA1 CA2 CA3 S1 11 7 17 S2 15 6 10 S3 0 0 13 S4 6 7 0 Exhibit QM–2

4. Decision Tree and Expected Values for Renting a Large or Small Retail Space Exhibit QM–3

5. The Breakeven Analysis A technique for identifying the point at which total revenue is just sufficient to cover total costs BE = [TFC/(P-VC)] Exhibit QM–4

6. OBJECTIVE RATIO CALCULATION Liquidity test Current ratio _Current assets_ Current liabilities Acid test Current assets level inventories Current liabilities Leverage test Debt-to-assets _Total debt_ Total assets Times-interest-earned Profits before interest and taxes Total interest charges Operations test Inventory turnover Cost of sales Inventory Total-assets-turnover Revenues Total assets Profitability Profit margin-on-revenues Net profit after taxes Total revenues Return-on-investment Net profit after taxes Total assets Popular Financial Controls Exhibit QM–5

7. Number of Hours Required per Unit WINDOWS MAC MONTHLY PRODUCTDEPARTMENT VERSION VERSION CAPACITY (HOURS) Design 4 6 2,400 Manufacture 2.0 2.0 900 Profit per unit $18 $24 Production Data for Virus Software 4R + 6S < 2,4002R + 2S < 900 Exhibit QM–6

8. Graphical Solution to Frye’s Linear Programming Problem Exhibit QM–7

9. Queuing Theory • Queuing theory • A technique that balances the cost of having a waiting line against the cost of service to maintain that line where n = 3 customers, arrival rate = 2 per minute, and service rate = 4 minutes per customer.

10. Determining the Optimum Economic Order Quantity Exhibit QM–8

11. Economic Order Quantity Example Forecast sales: 4,000 units a year Unit cost: $50.00 each Ordering cost: $35.00 per order Carrying costs: 20% of unit’s value. • Economic order quantity (EOQ) • A technique for balancing purchase, ordering, carrying, and stock-out costs to derive the optimum quantity for a purchase order.