Study of neuromarketing analysis

Study of neuromarketing analysis After having read a substantial amount of the current literature on the fascinating science of Neuromarketing, I find it hard to believe that it took so long for marketing and science to find together to create an academic field of its own right. The works of the human brain and psychology have always been a passion of mine; but my initial professional career took me deeply into the fields of marketing. In fact, I implemented marketing strategies for two of the most controversial industries today: the cigarette and the pharmaceutical industry. Although in both cases, we used the most advanced instruments of modern marketing, I was always curious if there would not be a way to market a product more scientifically than we did at that time and that was despite the fact that all companies I worked for were major global players in their respective field. So when I stumbled upon Neuromarketing in the scope of this Masters degree, I was immediately intrigued by it. Neuromarketing promises to give answers to some of the most important questions of marketing, namely why do we buy things, and what does it do to our brain? I would like to express my gratitude to Malaika Brengman who enabled to seize this unique opportunity to write this thesis. Furthermore, I would thank my mother Ayse Sayin, who kindly shared her extensive knowledge about scientific problems and supported me throughout the complete working process of this paper. Finally, I would like to thank my partner Max Obenaus, who deeply shared my interest in the subject, and whose relentless effort and stimulating discussions has enabled me to write this paper. Brussels, May 2011 TABLE OF CONTENTS INTRODUCTION Neuromarketing, bridging marketing and neuroscience, is a rapidly growing area of research, which introduces a scientific layer to the academic field, and hence creates some high expectations on the one hand, and a lot of critique on the other. The vast amount of data retrieved through neuroscientific analysis promises to provide a better understanding of consumer behaviour, and raises the hope that the marketing strategies of the future will be more efficient and better targeted to the consumer. In fact, the controversy around the mythical buy button shows that the scope and limitations of the scientific field of neuromarketing are not yet properly defined. The horror scenario of complete corporate control of consumer behaviour often stands in the way of a proper analysis of the risks and potentials of neuromarketing; at the same time it seems that a fundamental distinction has to be made between an academic and a corporate approach to neuromarketing. In both cases the willingness to advance the science of neuromarketing should be immense. For corporations, obviously, the prospect of exerting vast scientific control over consumer behaviour is most attractive. For the academic world, it will be a challenge on many different levels. First, it is about exploring the scientific limits of consumer analysis, taking into account the subconscious forces that are at play when a purchase is made. Secondly, and more importantly, the development of neuromarketing raises fundamental moral questions. Freedom of choice, free market and ethics need to be addressed, leading to the formulation of neuroethics. Following this, a legal framework for neuromarketing needs to be defined, which decides whether or not individual consumer rights need protection via a newly defined private sphere, or if we even trust enough the dynamics of the free market to sufficiently self-regulate these moral and legal grey areas. A literature review in this field will give an idea on the studies in this nascent science that is claiming worldwide recognition and possible areas for further research. 2. DEFINITIONS 2.1. Neuromarketing This interest in neurosciences has eventually caught the attention of both businesses and academia that are involved in a subset of economics, i.e. marketing. Being able to understand how the brain processes information and reacts to marketing stimuli, to eventually come up with purchasing decisions would provide a huge leap in marketing science as well as leading to huge profits through triggering the desired consumer responses. In other words, it would be the discovery of the well publicized buy button (Wells, 2003). As a result, marketing has also started to benefit from neurosciences. The resulting multidisciplinary science is termed as neuromarketing or consumer neuroscience. Neuromarketing is broadly defined as a sub-area of neuroeconomics that addresses marketing relevant problems with methods and insights from brain research (Fugate, 2007; Lee et al., 2007). Neurosciences could provide inputs to marketing in different areas such as providing a deeper insight of consumer behaviour and decision making processes, better understanding of advertising, a clearer make-up of branding, an analysis of the market and eventually politics which benefits from all of the above. The first use of fMRI as a marketing tool was reported by Gerry Zaltman of Harvard towards the end of the 1990s (Addison, 2005). However, the term Neuromarketing was only coined by Professor Ale Smidts in 2002, and it was not until 2004 that the first ever Neuromarketing conference was held at Baylor College of Medicine in Houston (Dawis,L. 2005). The tools and methods used for neuromarketing analysis are rapidly developing, enabling better visualization of the subconscious customer responses. Fugate indicates that the use of neuromarketing, if proven through use, has the capability of fundamentally changing how we design, promote, price, and package our products (Fugate, 2007) Consequently, neuromarketing is fast becoming mainstream, widening its applications within marketing. In fact, the increasing popularity of neuromarketing could be traced from Google, where the search for the specific word shows a phenomenal progression from just a few hits in 2002 to thousands in 2010 (Morin, 2011). 2.2. Neuroeconomics Traditional economics considers human beings as rational and unemotional beings that have stable, well-defined preferences that can make rational choices with those preferences (Camerer Thaler 1995, 209). However, the reality hardly matches this classic theory of economic modelling. The decision-making processes are highly influenced by numerous past experiences, emotions and subconscious processes, which alter significantly the expected behaviours. Kenning points out that These anomalies were not proven to have been included into the earlier theories of traditional economics which was based on rational behaviour. (Kenning Plassmann 2005, 343; Schmidt 2008, 8-9.) The developments in neurosciences in recent decades, enabling researchers to determine the physiological and neurological responses have led other disciplines to utilize the methodologies and findings in neurosciences to verify the assumptions in their own fields. Thus, the application of neurosciences to verify the assumptions of economics has led to neuroeconomics. Braeutigam defines neuroeconomics as a new and highly interdisciplinary field, drawing from theories and methodologies employed in both economics and neuroscience, aiming at understanding the neural systems supporting and affecting economically relevant behaviour (Braeutigam, 2005). Consequently, neuroeconomics uses brain research methods to understand and explain economic phenomena, as well as facilitating and promoting the integration of neurological findings into economic sciences. Sanfey points out that Although both economists and neurologists attempt to understand and predict human behaviour, they have used quite different methods in the past. Whereas economic research has tried to explain behaviour through observational data and theoretical constructs such as utility or preferences, neurology contemplates the physiological elements and somatic variables that influence behaviour. Neuroeconomics, which evolved from the combination of both disciplines, proposes an interdisciplinary approach and specifically examines the neural correlates of decision-making (Sanfey et al., 2006). 2.3 The Conscious vs. the Subconscious The importance of neuromarketing lies in the dual nature of perception processes, i.e., conscious and subconscious. We know why we take certain purchasing decisions but not the others. In fact the majority of our actions fall under the latter category. Hausel (2007) and Szymkowiak (2011) indicate two different types of brain activity which could lead to this. The conscious mind can process 40 bits per second, whereas the subconscious mechanism is much faster, processing up to billions of bits per second. Furthermore it is always at work. As a result, everything that cannot be processed by the conscious falls into the realm of the unconscious, which functions as an autopilot that takes over when the conscious cannot process any more. In fact, consciousness is closely connected to focusing attention. In that sense, what we perceive attentively for example when we listen forms the conscious perception, whereas the background noise of all types are recorded in the subconscious. A similar situation is valid for visual perception. Usually the peripheral vision constitutes the realm of the subconscious while the conscious records what we look at attentively. 2.4. Subliminal Messaging Subliminal is derived from the Latin words sub (below) and limen (threshold), referring to the perception below the threshold of human consciousness. The presentation of audile or visual images at a speed or form that cannot be identified by the target person would be perceived by the individual, though not consciously. These subconscious perceptions, whether it is audible or visual, make it possible to influence that individuals decision-making processes, without that person being aware of this activity. An expected consequence would be the possibility to persuade that individual to purchase goods or services, which he/she would not be making otherwise. Although the practice of subliminal messaging was identified at the end of nineteenth century, the widespread recognition was in 1957, when market researcher James Vicary, using the term subliminal advertising for the first time, set up his Subliminal Projection Company and made his well known pop corn/coke advertisement during a Kim Novak film shown in New Jersey. He claimed that by quickly flashing the words Drink Coca Cola and Hungry? Eat popcorn for 1/3000 of a second, at five-second intervals on the movie screen during every presentation of this film, he had influenced people to purchase more food and drinks, selling 57.8% more Coca Cola and 18.1% more popcorn. Vance Packards book, Hidden Persuaders, published the following year included this experiment and had wide repercussions. Although Vicary admitted later on that he had lied about the experiment, there were widespread sentiments against the practice. Life treated subliminal advertising as fact and discussed its potential not only in selling but also in gaining support for anti-litter campaigns and even promoting political candidates while The Saturday Review, addressed his readers: Welcome to 1984. (OBarr,2005) The widespread belief that subliminal messaging could lead to brainwashing led to subsequent banning of subliminal advertising in various countries. The publishing of the book Subliminal Seduction by Dr. Wilson B. Key in 1973, marked another outrage against subliminal advertisement, leading to limitation of broadcasting with subliminal techniques. (Lindstrom,2003) The use of subliminal messaging had also been used in politics, the most famous being the TV Ad for George W. Bush during the 2000 presidential campaign. It showed words (and parts thereof) scaling from the foreground to the background on a television screen. When the word BUREAUCRATS flashed on the screen, one frame showed only the last part, RATSà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦((OBarr,2005). Music played in shops sometimes have embedded messages to spend more or discourage theft, leading to a decrease in thefts and increase in sales, which the consumer is unaware but is effective (Lindstrom, 2003) Subliminal messages could also be utilizing the associations and judgments of the consumer, fulfilling the subconscious sensory expectations from a product or service. Lindstrom argues that different aromas pumped into casinos, airplane cabins, hotel rooms, and just off the assembly line cars could be considered subliminal messaging as the leathery smell of a new car comes out of an aerosol can (Lindstrom, 2003). 2.5. The Senses Everybody perceives the surrounding world through 5 senses, that is: seeing, hearing, smelling, tasting and touching. Perception involves the reception through our sensory organs and the processing by the brain. However the perception depends not only on the external stimuli, but also on the genetic set up and residues of the previous experiences of the individual, formed by learning and memory. 2.5.1. Seeing The eyes are the visual information receptors. The impulse goes through the cornea and is projected on the retina, which is composed of a layer of millions of photoreceptors that are specialized neurons transforming the light inputs into electrochemical signals, codified in the brain. Out of the two types of photoreceptors, the rods sense motion, especially in dim light or dark, predominantly in the peripheral vision, while the cones work under intense light and are responsible for sharp details. The cones are most densely packed in the centre of the retina known as the yellow spot, producing the sharpest images. (Zurawicki, 2009) The saccadic movements of the eye enables sensing parts of a scene with greater resolution, helping build up a mental map of the scene while another eye movement, the involuntary micro saccades refreshes this image. The visual attention is focused at the upcoming target locations, shifting the activations in saccade and attention areas of the brain, some hundredth milliseconds before an eye movement, (Rolfs, Jonikaitis, Deubel Cavanagh, 2011). The saccades and micro saccades are considered to be important indicators for studying the observers specific point of interest and attention focus (Zurawicki 2009, Laubrock et al.2007) recorded with the use of eye tracking camera like electronic devices. However there are also claims doubting the validity of the use of micro saccade movements in this field Horowitz et al, 2007) Each eye directs visual signals through a million of fibres in the optical nerve to the optic chiasm, where they are integrated. After passing from the optic chiasm, the optical tracts end in thalamus, which subsequently relays them to the upper layers of the cortex. The information from the two eyes are still separate in the thalamus and get integrated in the cortex where the binocular vision is created (Zurawicki 2009). The cortex sends the re-processed signals back to the thalamus. Zurawicki states that Visual cortex is divided into 6 different areas each performing a distinct function and specializing respectively in various sub modalities of visual perception, that is: exploratory and general pattern recognition, stereoscopic vision, depth and distance, colour, complex movement, and determination of the absolute position of the object as opposed to the relative one. (Zurawicki 2009) The frontal, parietal, temporal, occipital cortex, thalamic nuclei, the claustrum, the caudate, the lentiform nucleus and the culmen, declive and vernis in the cerebellum are activated during visual perception and visual mental imagery (Ganis et.al.2004) The brain uses previously stored data from the memory, to provide meaning to what is being transmitted. The brain also has the capacity to make up for missing images, referred to as blind vision (Zurawicki 2009). 2.5.2. Hearing The sounds funnel into the ear, reaching the eardrum, which is a membrane which vibrates at different speeds, that is, the more acute the sound, the faster it vibrates. Small bones of the middle ear (the hammer, the anvil, and the stirrup) amplify the signal from the membrane and transmit it to the inner ear. The coiled part of the inner ear the cochlea is equipped with approximately 16 000 hair cells, which detect each sound frequency separately and in response to it move at a certain rhythm. This activates up to 30 000 of neurons of the auditory nerve pathways which carry the sound information via the thalamus to the temporal gyrus: the part of the cerebral cortex involved in receiving and perceiving sound. Our audiary system processes all the perceived signals in the same manner until they arrive at the primary auditory cortex in the temporal lobe. Here when speech is differentiated from other sounds, neuronal signal is directed to the left hemisphere where the language is proce ssed. (Zurawicki 2009). Audiary neurons are specialized, some responding to high frequencies and others low. Furthermore there are some which marks the beginning and others the end of a sound. Although some process of sound focalisation take place in the ears, sound recognition through specific harmonics of the sound is performed in the primary auditory cortex in the temporal lobe. 2.5.3. Smelling AKÃ…Å ¾AMA YAZCEM Ä °NÃ…Å ¾ALLAH!!! 2.5.4. Tasting BUNU DA!!!! 2.5.5. Touching BUNU DA!!!! 2.6. The Brain The brain is the central processing centre for all the motor and sensory information coming from different parts of the body. The stimuli received that are processed and distributed from the brain leads to different thoughts, as well as muscular and behavioural patterns. The processing of incoming information is carried out in different parts of the brain, that is to say there is a distinct functional differentiation within the brain. However, in spite of this functional differentiation, it is important to keep in mind that the brain is an extremely complex structure with strong inter-linkages among its billions of nerve cells (neurons) that take place within the brain, and that the brain functions as a whole. In order to get a better insight into the functional neuroanatomy of the brain, it may be useful to analyse the parts of the brain the functions of which have been more or less identified. The brain is covered with an outer layer called Cerebral Cortex. Neocortex, often referred to as grey matter takes place on the outer part of the cerebral cortex, while amygdala, cingulated cortex, hippocampus, and basal ganglia takes place in the grey pockets located within the white matter underneath. The brain is subdivided into four lobes, and two hemispheres with the deep folds. These four lobes have different functions: The frontal lobe, located under the forehead is where organising/planning, short term memory, judgement and controlling behaviour take place. Temporal lobe, which is under the ears and temples are related to understanding what we hear, speaking and memory he. visual memory is processed. BUNUN DEVAMI GELCEK!!! 2.7. Neuroimaging 2.7.1. Psychophysiological Measurement Techniques Facial expression, heart rate and skin conductance are the most relevant methods of autonomic measurement used in advertisement research. Emotional reactions to advertisement are measured by facial electromyography, which registers facial muscle activity. In facial EMG, electrodes that register muscle contractions are placed on the corrugator and zygomatic muscles. The corrugator muscle is located above the nose close to the eyebrow and contractions in this muscle are involved while frowning. The zygomatic muscle is situated around the cheeks and controls smiling (Poels and Dewitte,2006). The research of Hazlett and Hazlett has shown that facial EMG is a more sensitive indicator of emotional reactions to TV commercials and that the facial EMG responses were closely related to emotion congruent events during the commercial( Hazlett and Hazlett,1999). However, facial EMG has the drawback of being conducted in unnatural lab settings and making the subject self conscious. Skin conductance (SC) or electrodermal activity gives an indication of the electrical conductance of the skin related to the level of sweat in the eccrine sweat glands, which are involved in emotion invoked sweating (Poels and Dewitte, 2006). Either very pleasurable or very repellent advertising stimuli evoke large SC responses. However there are considerable personal variations and factors such as fatigue, medication etc can influence SC responses (Hopkins and Fletcher, 1994). The beating speed of our heart can provide clues as to attention and arousal related to commercials as well as an indication of valance of emotional response (Poels and Dewitte, 2006). In general, positive stimuli lead to an increase in the heart rate, while the negative stimuli does the opposite. Poels and Dewitte advise not to use heart rate as the single measurement method of emotional response (Poels and Dewitte, 2006). As the heartbeat is measured from the finger, it is quite convenient for the subject and is generally considered to be an easy and cheap way to measure reactions evoked by advertising (Lang, 1994). 2.7.2. Brain imagery How brain reacts to different types of stimuli is recorded through brain imagery. The major advantage of brain imagery is its objectivity, leaving out the possible response biases. Motte defines Brain imaging as a term that encompasses a set of techniques that allows for visualization of the regions of the brain that are activated in response to a certain stimulus, and Brain imaging systems as a set of techniques that allow visualizing the regions of the brain that are activated when (emotional) stimuli are presented(Motte, 2009). There are different methods for measuring and mapping brain activities related to neuromarketing. Lewis in his 2005 article refers to three brain-imaging techniques being used in Neuromarketing as fMRI (Functional magnetic resonance imaging), QEEG (Quantitative electroencephalography) and MEG (magnetoencephalography) and considers fMRI as the one which has captured the greatest interest of the market researchers among these and has enjoyed the widest publicity (Lewis, D.2005). Morin in his recent article cites electroencephalography (EEG), magnetoencephalography (MEG) and functional magnetic resonance imaging (fMRI) as the only three well established non-invasive methods for measuring and mapping brain activity (Morin, 2011) EEG, in spite of its being a rather old technology in neurology, is still considered to be a good way to measure brain activity, as it is significantly less costly. Motte points out that although the price of high quality, research-purposed EEG systems can range from $10,000 to $100,000, cheaper EEG systems exist that can cost from a few hundred to a few thousand dollars (Motte,2009) To see how EEG works, it should be kept in mind that our neural circuitry consists of over 100 billion neurons and trillions of synaptic connections. When faced with a particular stimulus, these neurons fire, producing tiny electrical currents. The brainwaves, which are the differing patterns of frequencies of these electrical currents that correspond to different states of arousal, are recorded at very short time intervals, reaching up to 10,000 times per second in some of the new EEG bands, an important characteristic when attempting to evaluate the incoming high speed information coming through our senses. However, EEG, which has become very popular among neuromarketing agencies in the last 5 years as it is considered to be helpful in assessing the value of a piece of advertising at a relatively low cost is considered by some cognitive scientists as being weak, if not dubious for the purpose of understanding and predicting the effects of advertising. (Morin, 2011) QEEG, is another brain imaging technology, which is used for neuromarketing purposes. David Lewis and Darren Bridger from Neuroco, a Neuromarketing research consultancy, have used QEEG analysing the responses of viewers to television commercials and other forms of advertising, exploring the effects of looking at happy or sad facial expressions (Lewis, D.2005) They claim that although the spatial resolution of QEEG is poor, it is capable of producing a continuous recording of the ongoing neuronal activity. The benefits of QEEG, is backed by more than 2,500 research papers published in peer reviewed journals (Rothschild M et al.,1986, Rothschild M and Hyun YJ. 1990, Smith ME and Gevins A,2004) MEG is yet another non-invasive neuro-physiological technique that measures the magnetic fields generated by neuronal activity of the brain. It measures the integrated magnetic signals emitted by activated neurons (Motte, 2011). The spatial resolution of MEG is usually superior to EEG as the magnetic signals it operates on are not as easily disturbed by the skull or brain tissues, as the electrical signals processed by EEG. MEG has been used for neuromarketing purposes, although to a far lesser extent. (Lewis, D.2005) A MEG system was used in the study of Braeutigam et al., where the team investigated real-life product choice in a retail store. (Braeutigam et al., 2001) In one study MEG was used to measure decision making among consumers in a virtual supermarket. The authors reported that the right parietal cortex became active only when faced with a preferred brand and concluded that this region was involved in making conscious decisions about shopping choices, and, perhaps, for more important life choices too. (Brautigam S et al.,2001) Magnetic resonance imaging (MRI) machines are powerful magnets that can provide an accurate internal image of the human body. The MRIs are used primarily in the functional imaging mode (fMRI), in order to monitor the miniscule blood flow changes that correspond to increased activity levels within the human brain. Visualization of the brains activity and structure is enabled by the iron content of the haemoglobin molecules within the red blood cells that carry oxygen to the brain. The increased use of oxygen of the nerve cells during excessive activity of these nerve cells, and the change in the magnetic properties of haemoglobin after it delivers oxygen to the nerve cells in the brain makes it possible to follow the signals that point out to activations in the brain. The major benefit of fMRI is that it can pinpoint these activations with millimetric precision. Many consider fMRI the best technological innovation ever developed to conduct clinical and experimental research on the brain (Morin, 2011)   The first use of fMRI as a marketing tool was reported by Gerry Zaltman of Harvard towards the end of the 1990s (Addison T.,2005). fMRI permits matching a specific product experience to the regions involved in pleasure and emotions in the brain. (Motte,2009) The studies using fMRI can be very costly as the price of these machines ranges between 1 and 3 million dollars. While a moving-image fMRI machine (acquisition cost: $2.5 million) is rented for $1,000 an hour at Emory University in Atlanta; A single experiment, which includes at least 12 participants, can cost $50,000 (Wells, 2003). When these three technologies are compared as to their applicability in neuromarketing, QEEG is mostly preferred as technology of choice in due to its being less expensive, simpler to use, and enables the recordings to be made in a wide range of natural environments. NERDEN BULDUM BUNU BEN:))BULAMAZSAM GÄ °DER!!! 2.8. Memory and Learning 2.8.1. Memory Magnetic resonance imaging 2.8.2. Learning 3. CRITIQUE AND MORAL IMPLICATIONS Martin Lindstrom, one of the most prominent supporters of neuromarketing, makes a convincing argument against neuromarketings potential to endow powerful corporations with something like a buy button to control our consumer behaviour. After all, it is nothing but a scientific tool that has to be put to right use, and it is the responsibility of whoever launches a neuroscientific study to take into account the appropriate neuroethical ground rules, , which have been discussed in the previous chapter. Ä °YÄ ° DURUYO DA NERDE DEMÄ °Ãƒâ€¦Ã… ¾Ãƒâ€žÃ‚ °Z TAM OLARAK -NEUROETHICS 3.1. Academic vs. Non-Academic Research Neuroscientific research is a cost-intensive undertaking: a functional Magnetic Resonance Imaging (fMRI) scanner alone is worth $4 million (Lindstrom, 2008, p. 8). This is where the controversy starts whose interest is behind a given multi-million neuromarketing study? The answer is simple, and it divides the field into two basic categories: academic and non-academic neuromarketing. In case of the latter, it is safe to assume that whether we are talking about a large-scale corporation or a political party, a powerful interest is behind the funding of a project, looking for a concrete result that justifies the large sum of investment. Academic studies, on the other hand, can probably be trusted to be more neutral in this respect. 3.2. The Buy Button-Myth Neuromarketing is by default a hybrid of corporate and academic culture and as such is doomed to experience much more intercultural turmoil than other sciences. Indeed it seems that in its young history, there has already been a vibrant exchange of critique among the fractions involved. The common media image of neuromarketing as the science in search of the buy button in our brain does not find much support on either side. German psychologist Frank Szymkowiak points out that neuromarketing, like other cognitive sciences, simply analyses the reactions of the human brain to cognitive stimuli. This, in his view, may lead to a more diversified and consumer-targeted use of marketing rather than it constitutes a threat to becoming to tool of omnipotence on behalf of the advertising agent (Szymkowiak, 2010, Journal of Consumer Protection and Food Safety, p. 83). 3.3. A Shallow Science? Szymkowiaks, however, does have a critical view on neuromarketing, and it is far more detrimental than the buy button-allegation. For him, neuromarketing is shallow by nature and inaccurate in its analysis of scientific testing. When confronted with subconscious phenomena, neuromarketing indulges in some kind of catalogisation, counting bits of neurotransmission rather than looking for a qualified causal context. It recognises subconscious brain activity lacks the capacity to account for it. In this respect it is inferior to more substantial sciences such as depth psychology which, building upon the foundations laid by its founding father Sigmund Freud, is able to generate an explanation for subconscious behaviour by accounting for underlying motives of the human psyche (Szymkowiak, 2010, Journal of Consumer Protection and Food Safety, p. 84). This lack of depth is due to a simplistic definition of the subconscious that neuro-marketeers. Here, the totality of the human brain activity is, just like computers, is captures in bits, and only 40 out of 11mio bits are actually processed by the rational part of the brain. The rest falls under the category of subconscious without any further explanation. Depth psychology, on the other hand, is said to delve deeply into the spheres of the subconsci

Little Field

After the initial observations of demand for littlefield labs (day 52), one of the first steps we took was to identify the bottleneck in the production chain. This was determined by looking at the rate of utilization of the three machines and the number of jobs in the queue waiting for these machines. It was quickly determined that the machine 1 was our bottleneck, as it was the only machine with 100% utilization and excess number of jobs in the queue. This meant that machine 1 was not able to keep up with the incoming demand and lacked the proper capacity.We knew that we needed to increase capacity and the decision was made to purchase another machine 1. Following the decision to purchase a machine, our focus shifted to the inventory level and the reorder point. It was obvious that the old reorder point was not going to keep up with the incoming demand level, especially considering the four day lead time. Our initial thinking was to set the reorder point to a level where the invento ry would have sufficient level of safety stock to avoid stocking out before the next batch of order came.Also we needed determine the quantity of inventory to order, making sure to take into account the ordering cost of $1000 as well. One of our initial goal for day 52 was to make sure our system was clear of any bottleneck and to have sufficient level of inventory to last us until day 73. This strategy was in part due to the fact that we did not have much time to analyze and properly forecast the future demand (initially meeting took place at midnight due to the long commute), but also to allow us to have more data about the incoming demand.To determine the proper level of order quantity and reorder point, we did a simple forecasting of incoming demand by using a simple linear regression analysis of observed demand for the first 50 days. Using this data we determined that the reorder point must be increased to 45 and the order quantity should be set at 250 kits. When we did meet th e following day, our focus was to forecast the demand out to day 120, since we had the knowledge of demand increasing and leveling out after day 120.Using the excel spreadsheet and looking at the linear regression line, we determined that the approximate level of demand on day 120 would be about 18 kits per day. This number was critical to our overall strategy going forward. Since we knew the demand would average around 18 kits a day, we wanted to have enough capacity in the machines to handle the demand. We figured to calculate the demand capacity of each machines by looking at the level of utilization of each machines on day 1, when the very first order arrived.Using the percentage of utilization and the actual number of job coming in for the first time, we were able to calculate the capacity of each machine with relative accuracy. It was determined that machine 1 had the capacity of 4. 5 jobs per day, machine 2 with capacity of 12. 5 jobs per day, and machine 3 with capacity of 1 2jobs per day. This meant that in order for us to accommodate the expected level of demand, we needed to have five units of Machine 1, two units of Machine 2, and two units of Machine 3.We wanted to have five units of Machine 1 because we did not want to have just 4 and have 100% utilization, causing a bottleneck situation. We also wanted to figure out the optimal reorder point and order quantity using the forecasted average demand of 18 jobs per day. We set the number of reorder point to 95 kits, accounting for the four day lead period and the level of safety stock we wanted to have. Then we determined the order quantity should be set at 500 kits, which would be sufficient level of inventory to last for full day.Finally, with the changes already made to improve our capacity and production lead time, we set out to maximize our profit margin for each job coming in. We agreed that contract three would be most profitable for us since we predicted out lead time to be cut under half a da y, and would not exceed one day with reasonable fluctuation of demand. Also, figuring that we wanted to move out any jobs ready for final processing, we switched the priority of Machine 2 to give priority to step 4.

Department for culture Essay

In the United Kingdom sport is provided throughout many different ways and is funded through government Lottery and private sources. Maria Miller who works through a DCMS select committee will. There are National governing bodies and another type of organisation called â€Å"QUANGOS†. According to BBC (2010) a quango is an organisation that is funded by taxpayers, but not controlled directly by central government. These are run away from the government In order to give a service to the public. This will be across a range of sports and can range from providing funding for teams to building new facilities in the area. Sports England is the organisation that will be written about in this assignment. According to (Sewell 1999:151) â€Å"many SDO’s and deliverers of sport development programmes more prosaically have identified a lack of funding as the major obstacle to achieving equality of opportunity† this view on sport in England has drastically changed. Sports England is in control of the direction that sport is going in England they have the support from the government. â€Å"Local authorities are the single biggest supporter of community sport and currently investing over ? 1bn every year through sport development activities, facilities and supporting local sporting clubs† (Sports England 2012) this shows how Sports England have the financial power in order to make change and back there projects to become successful and bring out result in participation levels. Sport England look to provide opportunity’s through them now recognising over 100 Sporting Organisations. Which consist of Archery GB, UK Athletics, British Cycling, The Football Association and England Netball . They provide support and funding to them in order to deliver sports to their audience. Through backing sporting organisations Sport England believe they will be â€Å"Improving health and community safety, increasing skills, employment and economic growth, and providing new opportunities for children and young people† (Sports England 2012) this aim of Sport England can be achieve from them building facilities in their area and making sure the clubs are provided with a solid financial backing. Sport England focus on increasing sports participation â€Å"Every one of the 4,000 secondary schools in England will be offered a community sport club on its site† (Sport England 2012) through them doing this will be able to have children involved in sport at an early age â€Å"Creating a sporting habit for life† (Sports England 2012) if Sports England can achieve their goal of creating all the facility’s. Then making them available to the schools they will help increase a young nations view on fitness and provide the schools with a chance to help promote this. â€Å"Young People continue to appear to have strong beliefs in the value of activity† (Sports England 2005, Sport in the UK pg. 11) this statement from Sport England provides what they want to achieve. This will be achieved through sports England’s funding to be drafted â€Å"We will invest over ? 450 million in work with national governing bodies of sport (NGBs). Young people (14-25 years old) will benefit from 60% of this investment. † This means that sports England will be investing ? 270 into keeping this age group involved in sports so they don’t stop participating. Sports England use a playground to podium scheme where they use their partners to run there schemes. â€Å"it comes following a consultation of landscaping partners Youth Sport Trust, Paralympics GB , UK Sport and a review of existing programs and initiatives. Athletics, Boccia, Football, Swimming, Table tennis, Wheelchair and basketball† Sport England (2012) these are the sports that Sport England will let other authority’s take Control of their sport and aim towards the goals set by Sport England and will have to aim to achieving them in order to receive funding at later dates. Quangos Definition http://www. bbc. co. uk/news/uk-politics-11405840 [07-12-12] Sports England http://www. sportengland. org/about_us/what_we_do. aspx [07-12-12] http://www. sportengland. org/support__advice/local_government/in_it_for_the_long_run/challenges_and_opportunities. aspx [07-12-12] Leona Trimble, L. etal (2010). Sport in the uk . Great Britain: learning matters ltd. 23. Sport England http://www. sportengland. org/about_us/what_we_do. aspx [07-12-12] Sewell (1999) Sports Development policy, process and practice http://www. sportengland. org/support__advice/playground_to_podium. aspx [ 13-12-12].

White House Patient Protection And Affordable Care Act Essay

Introduction to White House Patient Protection and Affordable Care Act (PPACA) Issues On March 23, 2010, President Obama signed the federal Patient Protection and Affordable Care Act (PPACA), known to everyone as the new and improved Health Care Reform. The new law was designed to make sure that consumers and their doctors, were in charge of their health care rather than insurance companies. The changes made in Health Care Reform laws by subsequent legislation implemented significant changes that reduced insurance fraud and protected the rights of the consumer. The Health Care Reform laws also provided world renowned benefits through health insurance marketplace’s so that business could compete to win the insurer s business. This article will attempt to address several policy modifications that positively and negatively impacted the desired outcome of Health Care Reform as it applies to the Affordable Care Act. Lastly, this article will also suggest three (3) methods by which the Constitution, specifically the powers of Congress address the role of the gov ernment through the use of business administration. Public Policy Challenges with the Implementation of the Affordable Care Act (ACA) The health care policy for many years has posed significant challenges for administrators within the federal system, which also span in the public, nonprofit and business arena. One of the administrative agency’s primary area of focus is to educate individual through preventiveShow MoreRelatedThe Patient Protection Affordable Care Act Essay1648 Words   |  7 PagesThe Patient Protection and Affordable Care Act, more commonly known as Obamacare, was passed in June of 2010 by the Supreme Court (Doyle 1). Georges C. 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