Author Question: Data Driven Decision Making Kroger Groceries provides store managers flexibility to determine prices ... (Read 71 times)

jake · **on:** Jul 1, 2018

Data Driven Decision Making Kroger Groceries provides store managers flexibility to determine prices for a number of popular items they carry because demand is affected primarily by local conditions that managers are more aware of. To make sure managers use this discretion wisely, managers are rewarded with bonuses based on quarterly sales. With improvements in data collection and analysis, the quants in corporate headquarters can run many small experiments. Doing so allows them to understand nuanced patterns in consumer demand that had been un-noticed previously. How does this affect manager compensation?

Question 2

As long as marginal cost is decreasing, marginal product is
a. less than average product.
b. greater than average product.
c. equal to average output.
d. equal to total product.

Hikerman221 · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

The new ability to mine the data by the quants represents a change in where the relevant information is located. Information that once was exclusively at the store level, is now available to corporate headquarters. It is likely, then, that more of the pricing decisions should be made where this information is becoming available. This means that managers need not be compensated for pricing decisions that are now out of their hands.

Answer to Question 2

b