Can you please help with figuring out this assignment?
Your second assignment is a follow-up analysis of the business plan. You would like to see the profitability of the current operation, seek room for improvement, and examine the potential threat from the competitor to A+ Rental Cars. The executives were happy about your initial report and allocated some more budget for research, which was then conducted by other researchers. Thanks to those other researchers, you now have up-to-date information about the cost of operations. However, since you were not consulted as part of that research process, be somewhat cautious in interpreting the research results. Read the attached report to learn about the details. Now, write a business report. Some questions to answer are listed as Tasks. Unlike the Team Homework, this assignment has few structures to guide you through. Please be creative yet focused on the goal. Avoid jargon and use plain language in the body of your report, while including necessary technical details in an appendix. For instance, explain price responsiveness and its implication in your body, while showing the calculation of demand elasticities in your appendix. The rubric is placed in the Assignment Submission page. It uses generic criteria in clarity and accuracy. Overview Your second assignment is a follow-up analysis of the business plan. You would like to see the profitability of the current operation, seek room for improvement, and examine the potential threat from the competitor to A+ Rental Cars. The executives were happy about your initial report and allocated some more budget for research, which was then conducted by other researchers. Thanks to those other researchers, you now have up-to-date information about the cost of operations. However, since you were not consulted as part of that research process, be somewhat cautious in interpreting the research results. Read the attached report to learn about the details. Now, write a business report. Some questions to answer are listed as Tasks. Unlike the Team Homework, this assignment has few structures to guide you through. Please be creative yet focused on the goal. Avoid jargon and use plain language in the body of your report, while including necessary technical details in an appendix. For instance, explain price responsiveness and its implication in your body, while showing the calculation of demand elasticities in your appendix. The rubric is placed in the Assignment Submission page. It uses generic criteria in clarity and accuracy. Research Staff Memo The accounting department at the corporate office has provided you with some historical cost data. The rent contract is already made, so the expense will be incurred regardless of the operation status (i.e., shutdown or go). In contrast, the monthly base operational cost can be avoided if the operation is entirely shut down. Otherwise, this base cost will be incurred regardless of the operation size. Lastly, there is a variable cost that depends on the size of production. Here is the summary: · Monthly rent for the store ($): 3,000 · Monthly base operational cost ($): 1,000 · Cost for Economy Car per day ($): (1 )Q2 + 8Q 40 The quantity Q is measured by a car-day. (e.g., if one car is lent for 5 days, Q = 5; if two car is lent for 3 days, Q = 3*2 = 6.) The per car-day cost is quadratic due to the required labor, maintenance, depreciation, etc. (You should be able to find the solution to the optimization problem using the Excel/spreadsheet like you did in the Team Homework. However, you may find it easier if you can find the cost function and its derivatives with algebra. Post on the discussion forum if you would like some hint/guidance on this.) Tasks Task 1 Previously you determined the revenue-maximizing price based on your demand equation. Is maximizing revenue the most appropriate objective for A+ Rental Cars? Explain. If not, recommend an alternative approach and justify your stance. Task 2 Suppose we maintain the daily rental price of $28 for an Economy car. What are the 1) break-even point of production; 2) optimal, profit-maximizing point of production; and 3) average cost-immunizing point of production? Provide any technical analysis (either analytically solved or numerically by Excel) into the Appendix. Make sure to explain the implication of your analysis result. 1. Break-even point of production: 3,000 Hint: Tools like equation calculator (e.g., Wolfram) and graphing calculator (e.g., Desmos) may be useful in your technical analysis, although not required. Task 3 The monthly demands may fluctuate (as seen in the previous Assignment). Given the profit analysis you just completed, what is the implication of such an observation? What business action would you recommend to avoid the potential loss of profit, or sometimes even negative profit? Task 4 From the previous analysis, we know that the price elasticity is high at the current price level. Given the analysis above, what is your recommendation for the long-run strategy (i.e., investment)? What information would you need to ask for from your research team to make a better decision? Task 5 Given that you are one of the only two competitors in the area, what does the analysis above imply in terms of your current business strategy? Analyze the potential room for improvement as well as the strategic risks. Hint: Discuss cases given assumptions about unknowns such investment return, competitor's action, and so on.