The Operations Manager for a Local Bus Company Wants to Decide

question 98

Multiple Choice

The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary depending upon whether passenger demand is low, medium, or high, as follows:

If he feels the chances of low, medium, and high demand are 30 percent, 30 percent, and 40 percent respectively, what is the expected annual profit for the bus that he will decide to purchase?

• A)$15,000
• B)$61,000
• C)$69,000
• D)$72,000
• E)$87,000

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Definitions:

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity used to finance its overall operations and growth.

Quality

The degree of excellence of a product or service, reflecting its ability to satisfy customer needs and expectations.

Customer Satisfaction

A measure of how products or services supplied by a company meet or surpass customer expectation.

Financial Performance

A measure of how well a company can use assets from its primary mode of business and generate revenues. This term reflects the financial health of a business.