Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available under the Investor Relations link at the company’s website (www.target.com). This case addresses a variety of characteristics of financial statements prepared using U.S. GAAP. s are grouped in parts according to various sections of the textbook. Part A: Financial Statements, Income Measurement, and Current Assets A1. What amounts did Target report for the following items for the year ended February 1, 2020? a. Total revenues b. Income from current operations c. Net income or net loss d. Total assets e. Total equity A2. What was Target’s basic earnings per share for the year ended February 1, 2020? A3. What is Target’s fiscal year-end? Why do you think Target chose that year-end? A4. Regarding Target’s audit report: a. Who is Target’s auditor? b. Did Target receive a “clean” (unmodified) audit opinion? c. How many critical audit matters were discussed in Target’s audit report? A5. What amount did Target report for total assets, total liabilities, and total shareholders’ equity (labeled “Shareholders’ investment”) in the most recent year? Show that the basic accounting equation remains in balance. A6. a. Find sales revenue (labeled “Sales”) in the income statement (labeled “Consolidated Statement of Operations”) and record sales for the year, assuming all sales were for cash. b. Find total cost of goods sold (labeled “Cost of sales”) in the income statement and record the journal entry for cost of goods sold for the year. c. Record inventory purchases for the year, assuming all were on account. [Hint: To calculate the amount of purchases, use a T-account for inventory and input the beginning and ending balances of inventory from the balance sheet. Input the credit to inventory from requirement 2(b) and solve for the missing amount to calculate inventory purchases.] A7. Note 9 provides information on Target’s current assets. Assume all prepaid expenses are for prepaid insurance and that insurance expense comprises $50 million of the $16,233 million of selling, general, and administrative expenses reported in the income statement for the year ended February 1, 2020. How much cash did Target pay for insurance coverage during the year? Prepare the adjusting entry Target would make to record all insurance expense for the year. What would be the effect on the income statement and balance sheet if Target didn’t record an adjusting entry for prepaid expenses? A8. a. By how much did retained earnings increase/decrease in the most recent year compared to the previous year? b. Target reduces retained earnings for “Dividends declared” and “Repurchase of stock.” These two amounts totaled $2,865 million in the most recent year. Using this amount and your answer in (a), compute Target’s net income. Verify your answer by finding net income (labeled “Net earnings”) in the income statement. A9. By what name does Target label its balance sheet? A10. What amounts did Target report for the following items on February 1, 2020? a. Current assets b. Long-term assets c. Total assets d. Current liabilities e. Long-term liabilities f. Total liabilities g. Total shareholders’ equity A11. What was Target’s largest current asset? What was its largest current liability? A12. Compute Target’s current ratio and debt to equity ratio in 2020? A13. Assuming Target’s industry had an average current ratio of 1.0 and an average debt to equity ratio of 2.5, comment on Target’s liquidity and long-term solvency. A14. By what name does Target label its income statement? A15. What amounts did Target report for the following items for the year ended February 1, 2020? a. Sales b. Cost of goods sold (labeled cost of sales) c. Earnings from continuing operations before income taxes d. Net earnings from continuing operations e. Net earnings A16. Does Target report any items as part of its comprehensive income? If so, what are they. A17. Does Target prepare the statement of cash flows using the direct method or the indirect method? A18. Which is higher, net earnings or operating cash flows? Which line item is the biggest reason for this difference? Explain why. A19. What are the largest investing cash flow and the largest financing cash flow reported by the company for the year ended February 1, 2020? A20. Refer to Disclosure Note 17 following Target’s financial statements. Find the schedule showing the lease payments over the next five years and beyond. What are the total lease payments for operating leases and finance leases? What are the present values of those lease payments for each type of lease? What accounts for the difference between the two amounts? A21. What are the weighted-average discount rates used to calculate the present value of each type of lease? A22. Does Target report its lease liabilities for the total amount of the lease payments or the present value of those lease payments? A23. What was the amount of revenue Target reported in its income statement for the fiscal year ended February 1, 2020? A24. Disclosure Note 2 indicates that Target generally records revenue in retail stores at the point of sale. Does that suggest that Target generally records revenue at a point in time or over a period of time? Explain. A25. Disclosure Note 2 indicates that customers (“guests”) can return some merchandise within 90 days of purchase and can return other merchandise within a year of purchase. How are Target’s revenue and net income affected by returns, given that it does not know at the time a sale is made which items will be returned? A26. Disclosure Note 2 discusses Target’s accounting for gift card sales. Does Target recognize revenue when it sells a gift card to a customer? If not, when does it recognize revenue? Explain. A27. Disclosure Note 4 discussed how Target accounts for consideration received from vendors, which they call “vendor income.” Does that consideration produce revenue for Target? Does that consideration produce revenue for Target’s vendors? Explain. A28. In what note does Target disclose its policy for designating investments as cash equivalents? A29. What is Target’s balance of cash equivalents for the fiscal year ended February 1, 2020? A30. In what note does Target disclose its policy with respect to accounting for merchandise returns? A31. Does Target have accounts receivable? Speculate as to why it has the balance that it has. (Hint: See Disclosure Notes 2, 7, and 9.) A32. Does Target use average cost, FIFO, or LIFO as its inventory cost flow assumption? A33. In addition to the purchase price, what additional expenditures does the company include in the initial cost of inventory? A34. Calculate the gross profit ratio and the inventory turnover ratio for the fiscal year ended February 1, 2020. Compare Target’s ratios with the industry averages of 24.5% and 7.1 times. Determine whether Target’s ratios indicate the company is more/less profitable and sells its inventory more/less frequently compared to the industry average. A35. What retail indices (internally measured or externally measured) does Target use to measure the LIFO provision? A36. Does Target adjust the retail value of inventory for permanent markups or permanent markdowns to effectively report inventory at the lower of cost or market? A37. Target has agreements with certain vendors whereby Target does not purchase or pay for merchandise until the merchandise is ultimately sold to a customer. See Revenue Note 2. Are sales and cost of sales of this inventory included in Target’s income statement? Is unsold inventory at the end of the year included as part of ending inventory in the balance sheet? Part B: Property, Plant, and Equipment and Intangible Assets B1. What amount ($ in millions) does Target report for net property and equipment for the year ended February 1, 2020? What is the largest category of property and equipment reported on the face of the balance sheet? B2. What amount ($ in millions) of cash was used in the fiscal year ended February 1, 2020, to purchase property and equipment? Is this an increase or decrease compared to the previous year? B3. Do you think a company like Target would have more research and development costs or more advertising costs? Explain. B4. What is Target’s fixed-asset turnover ratio for the fiscal year ended February 1, 2020? What is the ratio intended to measure? B5. Does Target include any intangible assets in total assets (yes/no)? (Hint: see Notes 11 and 12.) B6. Compare the property and equipment listed in the balance sheet with the list in Note 10. What are the estimated useful lives for recording depreciation? Is land listed in Note 10 (yes/no)? B7. In Note 10, which depreciation method does Target use for property and equipment for financial reporting? Which depreciation method is used for tax purposes? Why might these methods be chosen? B8. In Note 10, how does Target record repairs and maintenance expense? B9. In Note 10, does Target report any impairment of property and equipment for the year ended February 1, 2020? If so, what was the amount and what were the reasons for the impairments? B10. From Notes 11 and 12, were any impairments related to intangible assets recorded for the year ended February 1, 2020? If so, what was the amount and what were the reasons for the impairments? Part C: Investments Target does not have investments in stock or bonds. However, CVS Health Corp., which purchased Target’s pharmacy and clinical business during 2015, does have some investments. Access CVS’s 2019 10K at investors.cvshealth.com to answer the following s: C1. Regarding CVS’s investments in debt securities: a. Turn to Note 1: Significant accounting policies. What approach is CVS using to account for its investments in debt securities–are they HTM, TS, or AFS? b. Turn to Note 3: Investments. What is the total amount of CVS’s investments as of 12/31/2019, and where are those investments shown on CVS’s balance sheet? c. What is the total amount of CVS’s debt investments that are classified as available-for-sale as of 12/31/2019, and how much of that total is amortized cost as opposed to accumulated fair value adjustment that account for unrealized gains and losses? d. Turn to Note 4: Fair Value. What is the amount of CVS’s investments in debt securities that is categorized as Level 1, Level 2, and Level 3 of the fair value hierarchy? C2. Per Note 1, CVS has equity-method investments in Sure Scripts, LLC, and in Heartland Healthcare Services. CVS indicates that those investments are immaterial for the year ended December 31, 2019. Assuming that the Heartland investment is material: a. How would Heartland’s earnings affect CVS’s income statement? b. How would Heartland’s earnings affect CVS’s balance sheet? Part D: Liabilities D1. Target’s Consolidated Statement of Financial Position (its balance sheet) discloses its current assets and current liabilities. a. What are the three components of Target’s current liabilities? b. Are current assets sufficient to cover current liabilities? What is the current ratio for the year ended February 1, 2020? How does the ratio compare with the prior year? D2. Disclosure Note 2 discusses Target’s accounting for gift card sales. a. By how much did Target’s gift card liability change between February 1, 2020, and February 2, 2019? b. How would the following affect Target’s gift card liability (indicate “increase,” “decrease,” or “no change” for each): i. Sale of a gift card ii. Redemption of a gift card (the holder using it to acquire goods or services) iii. Increase in breakage estimated for gift cards already sold D3. Disclosure Note 14 discusses Target’s accounting for contingencies. Is its approach appropriate? D4. Calculate the debt to equity ratio for Target at February 1, 2020. The average ratio for companies in the Discount Retailers industry sector in a comparable time period was 1.95. D5. Calculate Target’s times interest earned ratio for the year ended February 1, 2020. The coverage for companies in the Discount Retailers industry sector in a comparable time period was 6.5. Part E: Leases,” Income Taxes, and Pensions E1. a. Note 17 indicates that Target’s finance lease liability at February 1, 2020, is $1,370 (= $67 current + $1,303 noncurrent) while its finance lease assets are $1,180. Why do the asset and liability amounts differ? b. Target’s finance lease assets are listed on February 1, 2020, at $1,180 million. What was the original amount recorded for these specific right-of-use assets when the leases commenced? c. Refer to Target’s Statement of Cash Flows. Prepare a journal entry that summarizes Target’s acquisition of assets by operating lease for the 12 months ended February 1, 2020. E2. From the income statement, determine the income tax expense for the year ended February 1, 2020. Tie that number to the second table in Disclosure Note 18, “Provision for Income Taxes,” and prepare a summary journal entry that records Target’s tax expense from continuing operations for the year ended February 1, 2020. E3. Focusing on the third table in Disclosure Note 18, “Net Deferred Tax Asset/ (Liability),” calculate the change in net deferred tax assets or liability. By how much did that amount change? To what extent did you account for that change in the journal entry you wrote in your answer to E2? List possible causes of any difference. E4. Target’s Note 18 indicates that “We recognized a net tax benefit of $36 million and $372 million in 2018 and 2017, respectively, primarily because we remeasured our net deferred tax liabilities using the new lower U.S. corporate tax rate.” What was the effect of the tax rate change on 2018 net income? E5. What is Target’s liability for unrecognized tax benefits as of February 1, 2020? If Target were to prevail in court and realize $50 million more in tax savings than it thought more likely than not to occur, what would be the effect on the liability for unrecognized tax benefits and on net income? E6. What were the changes in Target’s Projected Benefits Obligation in the fiscal years ended February 1, 2020 (fiscal 2019), and February 2, 2019 (fiscal 2018), for its qualified pension plans? E7. What were the changes in Target’s Pension Plan Assets in the fiscal years ended February 1, 2020, and February 2, 2019, for its qualified pension plans? E8. Were these pension plans overfunded or underfunded for the fiscal years ended February 1, 2020, and February 2, 2019? E9. What were the components of Target’s Pension Expense in the fiscal years 2019, 2018, and 2017? Part F: Shareholders’ Equity and Additional Financial Reporting Issues F1. Note 25, “Share Repurchase,” provides the information we need to reconstruct the journal entry that summarizes Target’s share repurchases in the year ended February 1, 2020. Provide that entry (dollars in millions, rounded to the nearest million). F2. Does Target account for share repurchases as (a) treasury stock or (b) retired shares? F3. What are the three types of awards described in Note 21, “Share-Based Compensation”? F4. Based on the fair value of the awards granted, what was Target’s primary form of share-based compensation for the year ended February 1, 2020? F5. Projections of future performance should be based primarily on continuing operations. What was diluted EPS for continuing operations in each of the most recent three years? F6. How many shares were included in diluted earnings per share but not basic earnings per share due to share-based compensation awards? F7. Refer to Target’s financial statements for the year ended February 1, 2020. Note 8 provides information on Target’s inventories. What method does Target use to report most of its inventories? F8. If Target changed that method to another method, how would it account for the change? F9. Suppose Target uses the FIFO costing method but decided to change to the LIFO method. How would it account for the change? F10. Did Target’s cash provided by operating activities in fiscal 2019 increase or decrease from the previous year? F11. Is Target’s cash provided by operating activities more or less than net income in fiscal 2019? F12. What is Target’s largest investing activity? F13. Is Target increasing or decreasing its long-term debt? F14. Some transactions that don’t increase or decrease cash must be reported in conjunction with a statement of cash flows. What activity of this type did Target report during each of the three years presented? F15. Note 16 indicates that Target has derivative instruments consisting of interest rate swaps that are designated as fair value hedges. The total notional amount of the existing swap agreements is $1,500 million. According to the note, how is the net settlement determined under these agreements? F16. Target has designated its interest rate swaps as fair value hedges. What interest rate risk is Target concerned about? F17. Does Target have a gain or a loss on its interest rate swaps for the fiscal year ended February 1, 2020, and where in the financial statements was the gain or loss recorded? On the bond? Did earnings increase or decrease due to the hedging arrangement? Why? F18. Based on information in Note 6 and Note 15, what are the balance sheet effects of the hedging relationships described in Note 16 at February 1, 2020?
> Suppose the Environmental Protection Agency is in the process of investigating Ozone Ruination Limited for possible environmental damage but has not proposed a penalty as of December 31, 2020, the company’s fiscal year-end. Describe the two-step process
> Whaley Distributors is a wholesale distributor of electronic components. Financial statements for the years ended December 31, 2022 and 2023, reported the following amounts and subtotals ($ in millions): In 2024, the following situations occurred or came
> What transactions are included in income from continuing operations? Briefly explain why it is important to segregate income from continuing operations from other transactions affecting net income.
> Funseth Farms Inc. purchased a tractor in 2021 at a cost of $30,000. The tractor was sold for $3,000 in 2024. Depreciation recorded through the disposal date totaled $26,000. (1) Prepare the journal entry to record the sale. (2) Now assume the tractor wa
> Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2009 by two talented engineers with little business training. In 2024, the company was acquired by one of its major customers. As part of an internal audit, the fol
> What are the three main types of sustainability disclosures? How can those disclosures provide information to shareholders and stakeholders?
> Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2012 by two talented engineers with little business training. In 2024, the company was acquired by one of its major customers. As part of an internal audit, the fol
> How does IFRS differ from current U.S. GAAP with respect to accounting for impairments?
> The Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,000,000. This cost included the following expenditures: The company estimated an eight-year useful life for the equipment. No residual value is antic
> Answer Q 12–26 but assume that the investment is classified as AFS.
> You have been hired as the new controller for the Ralston Company. Shortly after joining the company in 2024, you discover the following errors related to the 2022 and 2023 financial statements: a. Inventory at 12/31/2022 was understated by $6,000. b. In
> When market rates of interest rise after a fixed-rate security is purchased, the value of the now-below-market, fixed-interest payments declines, so the market value of the investment falls. How would that drop in fair value be reflected in the investmen
> The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost method at the beginning of 2024. At December 31, 2023, inventories were $120,000 (average cost basis) and were $124,000 a year earlier.
> Northwest Carburetor Company established a fund in 2021 to accumulate money for a new plant scheduled for construction in 2024. How should this special purpose fund be reported in Northwest’s balance sheet?
> Refer to the situation described in BE 11–2. Calculate depreciation expense for 2024 and 2025 using sum-of-theyears’- digits, assuming the equipment was purchased on (1) January 1, 2024, and (2) March 31, 2024.
> Comparative Statements of Retained Earnings for Renderer Corporation were reported as follows for the fiscal years ending December 31, 2022, 2023, and 2024. No preferred stock or potential common shares were outstanding during any of the periods shown.
> Superior Company owns 40% of the outstanding stock of Bernard Company. During 2024, Bernard paid a $100,000 cash dividend on its common shares. What effect did this dividend have on Superior’s 2024 financial statements?
> On December 31, 2023, Ainsworth, Inc., had 600 million shares of common stock outstanding. Twenty million shares of 8%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2024. On April 30, 2024, Ainsworth purchased 30 mill
> LCI Cable Company grants 1 million performance stock options to key executives at January 1, 2024. The options entitle executives to receive 1 million of LCI $1 par common shares, subject to the achievement of specific financial goals over the next four
> If merchandise inventory is understated at the end of 2023, and the error is not discovered, how will net income be affected in 2024?
> JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, JBL granted options to key officers on January 1, 2024. The options permit
> Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2024. How would this change likely be reported in the 2024 comparative financial statements?
> Walters Audio Visual, Inc., offers a stock option plan to its regional managers. On January 1, 2024, 40 million options were granted for 40 million $1 par common shares. The exercise price is the market price on the grant date, $8 per share. Options cann
> Sugar baker Designs Inc. changed from the FIFO inventory costing method to the average cost method during 2024. Which items from the 2023 financial statements should be restated on the basis of the average cost method when reported in the 2024 comparativ
> Refer to the situation described in P 19–2. Assume Partner prepares its financial statements using International Financial Reporting Standards (IFRS). Required: Determine the compensation expense related to the options to be recorded each year, 2024–202
> Refer to the situation described in BE 11–2. Assume the equipment was purchased on March 31, 2024, instead of January 1. Calculate depreciation expense for 2024 and 2025 using each of the following depreciation methods: (1) straight line, (2) double-decl
> Refer to the situation described in P 19–2. Assume Partner measures the fair value of all options on January 1, 2024, to be $4.50 per option using a single weighted-average expected life of the options assumption. Required: 1. Determine the compensation
> Partner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1, 2024, the company issued 400,000 executive stock options permitting executives to buy 400,000 shares of Partner stock f
> Witter House is a calendar-year firm with 300 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 30 million executive stock options permitting executives to b
> At January 1, 2024, M. E. Gaynor Corporation had outstanding the following securities: The following additional information is available: ∙ On September 1, 2024, M. E. Gaynor sold 72 million additional shares of common stock. â
> On January 1, 2024, Daewoo Industries had outstanding 440,000 common shares ($l par) that originally sold for $20 per share, and 4,000 shares of 10% cumulative preferred stock ($100 par), convertible into 40,000 common shares. On October 1, 2024, Daewoo
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> Al capture Company reported a net income of $150,000 in 2024. The weighted-average number of common shares outstanding for 2024 was 40,000. The average stock price for 2024 was $33. Assume an income tax rate of 25%. Required: For each of the following i
> Information from the financial statements of Park-Rao Industries included the following at December 31, 2024: Park-Rao’s net income for the year ended December 31, 2024, is $520 million. The income tax rate is 25%. Park-Raoâ€
> On December 31, 2023, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400
> On December 31, 2023, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. ∙ Dow issued a 4% common stock dividend on May 15 and paid ca
> Refer to the situation described in BE 11–20. Assume that SCC’s fair value of $40 million approximates fair value less costs to sell and that the present value of SCC’s estimated future cash flows is $41 million. If Web- Helper prepares its financial sta
> On December 31, 2023, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. ∙ Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $4
> Comparative Statements of Shareholders’ Equity for Locke Inter technology Corporation were reported as follows for the fiscal years ending December 31, 2022, 2023, and 2024. Required: Infer from the statements the events and transactio
> On October 15, 2023, the board of directors of Martinez Materials Corporation approved a stock option plan for key executives. On January 1, 2024, 20 million stock options were granted, exercisable for 20 million shares of Martinez’s $1 par common stock.
> U.S. Metallurgical Inc. reported the following balances in its financial statements and disclosure notes at December 31, 2023. U.S.M.’s actuary determined that 2024 service cost is $60,000. Both the expected and actual rate of return on
> A partially completed pension spreadsheet showing the relationships among the elements that constitute Carney, Inc.’s defined benefit pension plan follows. Six years earlier, Carney revised its pension formula and recalculated benefits
> Herring Wholesale Company has a defined benefit pension plan. On January 1, 2024, the following pension related data were available The rate of return on plan assets during 2024 was 9%, although it was expected to be 10%. The actuary revised assumptions
> Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2024. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of retur
> Sachs Brands’ defined benefit pension plan specifies annual retirement benefits equal to 1.6% × service year’s ×final year’s salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire a
> Sachs Brands’ defined benefit pension plan specifies annual retirement benefits equal to 1.6% × service year’s × final year’s salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire
> Sachs Brands’ defined benefit pension plan specifies annual retirement benefits equal to 1.6% × service year’s × final year’s salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire
> Refer to the situation described in BE 11–20. Assume that the fair value of SCC is $44 million instead of $40 million. What amount of impairment loss should WebHelper report in its income statement?
> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This m
> Use Solver to create Answer and Sensitivity Reports for question 17 at the end of Chapter 2 and answer the following questions: a. How much excess wiring and testing capacity exists in the optimal solution? b. What is the company’s total profit if it has
> Use the multiplicative seasonal technique for stationary data to model the data. Use Solver to determine the optimal values of a and b. a. What are the optimal values of a and b? b. Prepare a line graph comparing the predictions from this method against
> The CitruSun Corporation ships frozen orange juice concentrate from processing plants in Eustis and Clermont to distributors in Miami, Orlando, and Tallahassee. Each plant can produce 20 tons of concentrate each week. The company has just received orders
> Use the additive seasonal technique for stationary data to model the data. Use Solver to determine the optimal values of a and b. a. What are the optimal values of a and b? b. Prepare a line graph comparing the predictions from this method against the or
> Implement the following LP model in a spreadsheet. Use Solver to solve the problem and create a Sensitivity Report. Use this information to answer the following questions: a. What is the smallest value the objective function coefficient for X3 can assum
> Implement the following LP model in a spreadsheet. Use Solver to solve the problem and create a Sensitivity Report. Use this information to answer the following questions: a. Which of the constraints are binding at the optimal solution? b. Is the optima
> Consider the following constraint, where S is a slack variable: 3X1 1 4X2 2 S 5 12 a. What was the original constraint before the slack variable was included? b. What value of S is associated with each of the following points: i) X1 = 5, X2 = 0 ii) X1
> Consider the following constraint, where S is a slack variable: a. What was the original constraint before the slack variable was included? b. What value of S is associated with each of the following points: i) X1 = 2, X2 = 2 ii) X1 = 8, X2 = 0 iii) X
> Consider the following LP problem: a. Use slack variables to rewrite this problem so that all its constraints are equal-to constraints. b. Identify the different sets of basic variables that might be used to obtain a solution to the problem. c. Of the p
> Implement the following LP problem in a spreadsheet. Use Solver to solve the problem and create a Sensitivity Report. Use this information to answer the following questions: a. What range of values can the objective function coefficient for variable X1
> Computers and word processors notwithstanding, the art of writing by hand recently entered a boom era. People are buying fountain pens again, and mechanical pencils are becoming more popular than ever. Joe Script, the president and CEO of Parket Sisters,
> Consider the following LP problem: a. Use slack variables to rewrite this problem so that all its constraints are equal-to constraints. b. Identify the different sets of basic variables that might be used to obtain a solution to the problem. c. Of the p
> Consider the following LP problem: MAX: 4X1 1 2X2 Subject to: 2X1 1 4X2 # 20 3X1 1 5X2 # 15 X1, X2 $ 0 a. Use slack variables to rewrite this problem so that all its constraints are equal-to constraints. b. Identify the different sets of basic variable
> Refer to question 42 at the end of Chapter 3 and answer the following questions: a. Create a Spider Plot to summarize what happens to the optimal total profit as the total storage capacity increases from 300,000 cf to 400,000 cf in 10,000 cf increments.
> Use Solver to create a Sensitivity Report for question 37 at the end of Chapter 3 and answer the following questions. a. Is the solution degenerate? b. Is the solution unique? c. How much can the profit per ton on commodity one decrease before the optima
> Use Solver to create a Sensitivity Report for question 35 at the end of Chapter 3 and answer the following questions. a. Is the solution degenerate? b. Is the solution unique? c. How much should the recycler be willing to pay to acquire more cardboard? d
> CaroliNet is a satellite TV service provider for residential customers in the state of North Carolina. The company is planning to expand and offer satellite TV service in South Carolina as well. The company wants to establish a set of service hubs throug
> Use Solver to create a Sensitivity Report for question 34 at the end of Chapter 3 and answer the following questions: a. Is the solution unique? b. If Sentry wants to increase their production capacity in order to meet more of the demand for their produc
> The Embassy Lodge hotel chain wants to compare its brand efficiency to that of its major competitors using DEA. Embassy collected the following data reported in industry trade publications. Embassy views customers’ perceptions of satisf
> Use Solver to create a Sensitivity Report for question 33 at the end of Chapter 3 and answer the following questions. a. Is the solution degenerate? b. Is the solution unique? c. Use a Solver Plot to determine the maximum price the Pelletier Corporation
> Fidelity Savings & Loans (FS&L) operates a number of banking facilities throughout the Southeastern United States. The officers of FS&L wants to analyze the efficiency of the various branch offices using DEA. The following data has been selec
> Hamilton & Jovanovich (H&J) is a global investment company, providing start-up capital to promising new ventures around the world. Due to the nature of its business, H&J holds funds in a variety of countries and converts between currencies as
> Use Solver to create a Sensitivity Report for question 24 at the end of Chapter 3 and answer the following questions: a. Are there alternate optimal solutions to this problem? Explain. b. What is the highest possible octane rating for regular gasoline, a
> Winter Wear house operates a clothing store specializing in ski apparel. Given the seasonal nature of their business, there is often somewhat of an imbalance between when bills must be paid for inventory purchased and when the goods are actually sold and
> Use Solver to create a Sensitivity Report for question 29 at the end of Chapter 3 and answer the following questions. a. What is the maximum level profit that can be achieved for this problem? b. Are there alternate optimal solutions to this problem? If
> The CFO for Eagle Beach Wear and Gift Shop is in the process of planning for the company’s cash flows for the next six months. The following table summarizes the expected accounts receivables and planned payments for each of these month
> Refer to the previous question. Suppose location 1 has 15 cars available rather than 16. Create a Sensitivity Report for this problem and answer the following questions: a. Is the optimal solution unique? How can you tell? b. According to the Sensitivity
> Companies are often interested in segmenting their customers to better target specific product offerings to meet specific customer needs. The file CustomerData.xlsx that accompanies this book contains data on 198 customers for an online retailer. Specifi
> The accounting firm of Coopers & Andersen is conducting a benchmarking survey to assess the satisfaction level of their clients versus clients served by competing accounting firms. The clients are divided into four groups: A total of 4,000 companies
> Use Solver to create a Sensitivity Report for question 18 at the end of Chapter 3 and answer the following questions: a. Is the optimal solution unique? How can you tell? b. Which location is receiving the fewest cars? c. Suppose a particular car at loc
> A regional quality inspector for Green Roof Inns has 16 properties she must visit next month. The driving time from one property to the next is proportional to the straight-line distance between the properties. The X and Y coordinate for each property ar
> Refer to the previous question. Suppose the investments available to the Merrits have the following levels of risk associated with them. If the Merrits want the weighted average risk level of their investments to not exceed 4, how much money will they
> So how am I going to spend this money,” thought Martha Lentz as he sat staring at the pictures and posters of manatees around his office. An avid environmentalist, Martha is the president of “Friends of the Manatees&ac
> Use Solver to create a Sensitivity Report for question 17 at the end of Chapter 3 and answer the following questions: a. Is the solution degenerate? b. Is the solution unique? c. Explain the signs of the reduced costs for each of the decision variables.
> During the execution of the B&B algorithm, many candidate problems are likely to be generated and awaiting further analysis. In the B&B example in this chapter, we chose the next candidate problem to analyze in a rather arbitrary way. What other, more st
> Francois and Camille Merrit recently inherited a substantial amount of money from a deceased relative. They want to use part of this money to establish an account to pay for their daughter’s college education. Their daughter, Lisa, will
> Use Solver to create a Sensitivity Report for question 16 at the end of Chapter 3 and answer the following questions: a. Is the solution degenerate? b. Is the solution unique? c. Suppose the profit per pallet of Tahoe panels went down by $40. Would the
> Solve the following problem manually using the B&B algorithm. You can use the computer to solve the individual problems generated. Create a branch-and-bound tree to display the steps you complete
> Jack Potts recently won $1,000,000 in Las Vegas and is trying to determine how to invest his winnings. He has narrowed his decision down to five investments, which are summarized in the following table. If Jack invests $1 in investment A at the beginnin
> Use Solver to create a Sensitivity Report for question 15 at the end of Chapter 3 and answer the following questions: a. How much would electric trimmers have to cost in order for the company to consider purchasing these items rather than making them? b.
> Max Gooding is tired of losing money in his office’s weekly football pool and has decided to try to do something about it. Figure 8.44 (and file Football.xlsx that accompanies this book) contains a listing of the teams in the Imaginary
> A natural gas trading company wants to develop an optimal trading plan for the next 10 days. The following table summarizes the estimated prices (per thousand cubic feet [cf]) at which the company can buy and sell natural gas during this time. The compan
> Use Solver to create a Sensitivity Report for question 14 at the end of Chapter 3 and answer the following questions: a. Is the solution degenerate? b. Does the problem have alternate optimal solutions? c. If Sable University wanted 1,000 more maroon shi
> Brue Lee is the Vice President of Purchasing for the consumer electronics division of the Major Electric Corporation (MEC). The company recently introduced a new type of video camcorder that has taken the market by storm. Although Brue is pleased with th
> Alaskan Railroad is an independent, stand-alone railroad operation not connected to any other rail service in North America. As a result, rail shipments between Alaska and the rest of North America must be shipped by truck for thousands of miles or loade
> The Dot Com Corporation is implementing a pension plan for its employees. The company intends to start funding the plan with a deposit of $50,000 on January 1, 2022. It plans to invest an additional $12,000 one year later, and continue making additional
> Use Solver to create a Sensitivity Report for question 13 at the end of Chapter 3 and answer the following questions: a. If the company could get 50 more units of routing capacity, should they do it? If so, how much should they be willing to pay for it?
> Home Sweet Home Appliances manufactures specialty kitchen appliances at its factory in Hoover, Alabama. Presently, the company is preparing to deliver custom refrigerators and dishwashers to distributors in a number of different cities. It has 20 refrige
> Carter Enterprises is involved in the soybean business in South Carolina, Alabama, and Georgia. The president of the company, Earl Carter, goes to a commodity sale once a month where he buys and sells soybeans in bulk. Carter uses a local warehouse for s
> Acme Manufacturing makes a variety of household appliances at a single manufacturing facility. The expected demand for one of these appliances during the next four months is shown in the following table along with the expected production costs and the ex
> A winery has the following capacity to produce an exclusive dinner wine at either of its two ineyards at the indicated costs: Four Italian restaurants around the country are interested in purchasing this wine. Because The wine is exclusive, they all wa
