The Value Chain of the Home Bed Mattress

1 a. The value chain of the home bed mattress is a business value addition model that involves the separation of the flow of production into five separate modules. These are processes and activities incorporated during production, storage, marketing and selling of the final products so that it may add value to the final consumer[1]. The main aim of this model is to create value to the mattresses and as a result increase company profits through the competitive advantage it carries with it. In each and every activity involved in this model, the company gets an opportunity to save on cost and improve efficiencies.

The five main primary stages of this model includes; in bound logistics, operations, outbound logistics, marketing and sales and finally service. In this case, the initial stage would therefore involve the sourcing of the raw materials needed to produce high-quality mattresses, this is what is describes as the inbound logistics. During this stage, the company focuses on how to procure the raw materials for making mattresses, receiving, warehousing and managing the stock. The raw material is supplied by a reliable supplier in consideration of cost factor and are then stored in a waiting bay or a store with proper storage mechanisms before the production process begins. The model then proceeds to the next stage which can be described as the operation stage. This is the point where the raw materials are converted into finished products. At this point, the company aims at being efficient in the production process of the mattresses in order to save on cost of production. Some of the raw materials applied in this stage are from both natural and synthetic sources. The process involves the use of innersprings which are made from a wire together with semi-rigid netting and wire mesh to produce the insulator. A natural fiber and polyester together with a polyurethane foam is used to form the cushioning layers. The raw materials are then designed according to the standard size of the required mattress. The designing is done depending on the standardization principles that were set to avoid any case of discrepancies that occur between the maker and the user. Some of the appropriate mattress sizes include 39 inches wide with a length of 75 inches for a twin bed while for a double bed the width 54 inches and a length of 74 inches. All the above described activities focus on cost reduction through efficiency. The processed mattresses are then inspected, labeled and packed ready for sale. The quality control department ensures the manufacturing phase applies the most quality control procedures and at the critical points, the manufacturers implement inspection activities (Li & Kannan, 2014). This inspection process is also done after the production of the innerspring, before and after packing[2].

Once the production process is complete, we move to the third stage which now involves the outbound logistics. This is where the focus is laid on how the mattresses will reach the final consumer with a lot of ease and at a cheaper cost. At this stage, cost reduction is placed on activates such as transportation and shipment. The model then proceeds to the second last stage that is aimed at marketing and selling the mattresses. The aim of the company at this point is to generate more revenue through better prices in the market and also through the expansion of the market share. The final primary stage of this model is the service stage which involves all the activities that aims at creating positive customer experience such as customer service, refunds and warranties.

In the value chain process, also sub sits the support activities which aim at strengthening the above described five primary stages. Some of the support activities include procurement, technological development, human resource management and the company infrastructure. With proper procurement policies a company is able to settle on the cheapest supplier with good quality of materials. Technological advancement also helps increase efficiencies through the computerization of processes. Human resource management and good infrastructures will also be an impetus to efficiency and creating of competitive advantages to a company.

1 b,

The three capabilities include, firstly, the designing of the mattresses in relation to the required standard. A company producing the home bed mattresses should design them according to fit the standard needed by the user. Some of the designs include Width 39 inches, while the length is 74 inches for the double bed, for Queen Bed should have width 74 inches and length 80 inches, while the kind bed should record 78 inches width and 80 inches length. Secondly, the manufacturing process is another competency for any home bed mattress company. In the manufacturing process, the company should incorporate the raw material correctly to produce a standard mattress. Thirdly, the Quality control competence requires the management to possess the ability to inspect the raw materials, the production process, and the end items to ensure they meet the appropriate standard for use.

The manufacturing process can be regarded as the core competency since the company needs to produce the products that suit their customers. The management also needs to control the manufacturing processes through proper inspections to ensure the procedures are implemented well. For that reason, the firm can outsource other non-core activities such as purchasing and transporting or raw materials and even the distribution activities.

1 c, Porter’s five forces tries to explain the position of a company with respect to an entire industry and establish whether it is a potential force within that industry or not. These five forces of industrial analysis help in the realization of some of the factors in the external environment that affects a business’s operations.

First, we look at the competitive rivalry in this industry. This helps in the determination of competitive level of a firm within an industry; it does this through close analysis of the number and strengths of the competitors. Whenever there is a high level of rivalry, a company must design new measures to curb the tense level of competition. This can be accomplished through huge price cuts to customers and a more attractive after sells services. In this case of the mattress industry, there are several companies producing similar products with each firm aiming at marketing its products to capture the highest level of customers. Therefore, competition is quite high in this industry and, thus, any company that chooses to invest in the mattress business need to differentiate its products or produce very high-quality mattresses than its competitors. With better prices, quality mattresses and attractive services, this industry can still be an attractive and a promising one.

Secondly, we examine the supplier power. Here, the approach is to determine whether there are several suppliers of raw material within the industry or if only few exist. Focus is also placed on the volatility of the prices; can the suppliers easily manipulate the prices of their products for their own benefit? In relation to this mattress industry, supplier power is quite low since there are many suppliers providing the same natural and synthetic materials for producing appropriate mattresses. In this case, the producers have the opportunity to get the low materials at a cheaper price and also enjoy a constant flow of materials during the production process.

Another force examined is whether there is a threat for new entries within the industry. A fundamental question as to whether there are barriers for new firms willing to enter in to the industry is asked. If a firm can easily enter into this industry, then it is a potential threat to other firms already in the industry. In relation to the mattress industry, this threat appears to be real since firms can easily enter or live this industry with a lot of ease. There are few formalities involved in this kind of investment. This is a real threat because it can result into the loss of market share for the existing firms.

The bargaining power of the customers is also another factor that is widely considered under porter’s five forces. A question as to whether customers are able to lower down the prices of the products is asked. Under this force we look at the number of customers within an industry together with their corresponding volumes of sale. Other factor such as the cost of switching from one product to another is also concidred.If related to the mattress industry, the customer’s bargaining power is high within this industry due to the high number of suppliers for mattresses. With the suppliers being high, the prices definitely goes down and the consumers gets more freedom to chose from where and whom to from.[3] The last force analyzed is that of the threat of substitution. As to whether there exists a close substitute is a vital question. The existence of close substitutes weakens the prices a commodity since customers are always free to shift to other cheaper price. In this case, there are not close substitute to mattresses and therefore this industries appears to be comparatively stable. Through a close analyzation of the mattress industry under the five porter’s forces, a general conclusion can be made that the industry is viable and attractive but proper strategies has to be adopted by firms willing to venture into this business.

1 (d)

Strengths

The mattress industry produces a primary good and one that does not have any close substitute. This is a strategic gap for businesses in this industry since they can enjoy the stable prices witnessed in such markets and a more certain and predictable market for their products. Companies in this industry should therefore explore this market niche as a new strategy to expand their market and also to increase their revenues. This strength can only take effect if the company produces high quality mattresses that are durable and user friendly. Another huge strength for this industry is the technological advancements in the current age. Companies in this industry can use this strength as a strategy of enhancing their value chain through different avenues such as online digital marketing. Companies in this industry can use technological enabled platforms such as facebook to advertise and sell their products. Technology can also be applied in this industry during the five stages of the value chain as a strategic move to combat inefficiencies, redundancies and increase productivity. Availability or raw material is another source of strength in this industry which makes companies in this industry to have ease of access to raw material thus improving the inbound logistics being the first step of the value chain. As a result of this strength, companies in this industry can explore this gap as a strategy of value addition to their products.

Weakness

Proper waste management is a clear setback/weakness in this industry. Since most of the raw materials that are used in this industry are not biodegradable, they stand a chance of being an environmental pollution if not properly managed. Companies in this industry should therefore design new strategies of dealing with their wastes and worn out products. The use of technology can also take center stage in this area as there exist new ways of disposing non biodegradable wastes without the risk of pollution. Companies manufacturing mattresses can also recycle some of the products as a strategy of dealing with these wasteful products.

Opportunities

The mattress industry unlike other industries is faced with multiple opportunities raging from the stability of the prices to the certainty of the same market. This is an opportunity for expansion as companies in this industry can seek to increase their production capacity as a way of generating more revenue. The use of technology has also posed a new strategic opportunity in this industry. Companies in this industry can actualize the five stages of value chain with a lot of ease through the use of technology. The production processes can be enhanced through the invention and innovation of new machines and equipment. The use of computer gadgets to carryout inbound and outbound logistics will save time and improve efficiency. Technology can also help improve the shipment processes and offer better after sale services. Companies can also use websites and other platforms to advertise their products. All these are opportunities that can be tapped by companies in this industry as means and ways of expanding their business base and market share. Today’s market is globalised through technology and this stands to be an opportunity for businesses in this industry to partner with other stakeholders in enhancing their businesses. There are online marketing platforms such as Amazon and Alibaba that brings suppliers and consumers together, such platforms are an opportunity to all businesses.

Threats

Even though technology is seen as a friend to most companies in this industry, in some instances it can turn out to be a threat. Technological equipments and gadgets that are connected to the internet are vulnerable to hacking. This is a threat to data security and privacy. Vital business secrets and consumer information can land into bad hands if these systems are hacked. Technology can sometimes go wrong, through automation, some undesired outcomes can be produced and this is a potential threat to the business. Technology can also generate a new product that can turn out to be a close substitute of a mattress; this in itself is another threat to this industry due to the new competition it will be bringing. Companies in the mattress industry should view this as a strategy and call for more innovative approach in their production in order for them to remain relevant. Another threat in this industry is the fact that not all people are connected to the internet and thus limiting the level of access customers, clients and other stakeholders. Other external factors such as inflation and foreign exchange remains to be a potential threat to this industry.

1 (e)

Pursuing cost leadership is an ideal option in the mattress industry. The reason is that the product is considered to be a primary good and all available varieties are made from the similar raw material. It is not possible to differentiate a mattress without other companies making similar changes. But if a company in the industry wishes to increase its profits and to become more competitive it can do so by reducing the cost of their products and increasing their market share so as to enjoy economies of scale. To be a cost leader in the mattress industry, a company should invest in innovative technology that will reduce the cost of production. They should have very efficient logistics that lowers its cost base of labor to sustain its action of reducing product cost.

According to the SWOT analysis, the companies have an opportunity of selling their products to the young people who move from one city to another. A company that sells its product at an affordable price will make more sales and win more customers will buy from the company anytime they relocate.

Question 2: Machine Learning

2 (a)

Causation is the capacity of one variable to influence another variable by causing it to exist or its incidence to fluctuate[4]. The best-suited machine learning to use in causation is the supervised machine learning. The learning method assists in predicting an output based on a range of inputs. In supervised machine learning, each vector input value consists the desired output value. New examples can be mapped by analyzing the training data and producing an inferred function[5]. Thus, when a well-conducted it will allow a researcher to correctly determine class labels for the unseen scenario.

2 (b) (i)

In a case of deep leaning data representatives are studied as opposed to task-specific values. A deep learning machine can be applied in automatic text generation and identification of customers. A customer who has been served before can be identified and follow up on those customers will make them loyal to the organization.

2 (b) (ii)

In a case scenario using decision tree method, an organization may wish to make a decision to expand its investment in capacity building so as to prevent competitors from occupying the market. Using the presently available information it is possible to analyze events that may occur and the possible alternative. For example, the executive takes into account the cost of additional investment, it returns, and the possibility of customer defection. If the organization increases its capacity, it has to remain so even after shrinking in the market and if the organization remains small competitors will have a better market share. In such a scenario, a tree helps management easily consider various actions and make the best alternative decision.

2 (c)

Formula

Don Calculation

Katie Calculation

Accuracy

(completed as an example)

(TP + TN) / (TP + TN + FP + FN)

(220 + 650) / (220 + 650 + 100 + 30)

0.87

(170 + 740) / (170 + 740 + 10 + 80)

0.91

Precision

TP / (TP + FP)

220/(220 +100)

0.69

170 / (170 + 10)

0.94

Error rate

(FP + FN) / (TP + TN + FP + FN)

(100 + 30) / (220 + 650 + 100 + 30)

0.13

(10 + 80) / (170 + 740 + 10 + 80)

0.09

Recall

TP / (TP + FN)

220 / (220 + 30)

0.88

170 / (170 + 80)

0.68

Specificity

TN / (TN + FP)

650 / (650 + 100)

0.87

740 / (740 + 10)

0.99

False positive rate

FP / (TN + FP)

100 / (650 + 100)

0.13

10 / (740 + 10)

0.01

F-score

2* ((Precision*Recall) / (Precision + Recall))

2* (0.69*0.88) / (0.69 + 0.88)

0.77

2* (0.94*0.68) / (0.94 + 0.68)

0.79

ii) Taking a business context where a business what to investigate it service quality by taking feedbacks from the customers. Customers may respond by giving a positive feedback or a negative feedback. A positive feedback shows that customers are satisfied with the services provided by the organization while a negative feedback shows that customers are not satisfied. The high number of negative in Don’s model shows a higher rate of customer dissatisfaction and company will need to change its operation so as to maintain the market share.

iii) In a medical context, Katie’s model should be applied in a case of a test of a disease. Taking a sample from a large number of patients, the patients can be randomized so that the sample will not be biased. The patients can then be taken through a diseases test to determine those that are contaminated and those that are not. Such a test helps in determining the percentage of the population that is affected by a disease.

Iannumber ’s Analysis

Actual

Positive

Negative

Predicted

Positive

249

2

Negative

1

748

iv) Ian may not have made errors when recording data and such errors have the effect in the final result. Recording errors may be as a result of recording wrong values or recording a right value in a wrong place. The error may also be caused by ineffective randomization and choosing of the sample. When the randomized process is biased, the final result will also be biased. The sample size may also be small compared to the population this has an effect in the end result.

Question 3: Experiments

3 (a)

The control and treatment groups were effectively randomized as an equal number of both male and female is chosen and an average of their age determined (Ahmed & Elaraby, 2014). The population interest is the online buyer and an intervention is allocated to the population dividing it into two groups. Another intervention divides the group in their average age and the two groups are observed as identical. In the end, the outcome of the two groups is identical and there is a balance of the systematic differences.

3 (b)

The controlled group is the group that is not subjected to variation in the experiment. The group is held constant during an experiment. In the case of reducing prices by 10%, the deduction is applied in the treatment group and not the controlled group. The value of the average spend per visit will, thus, be high in the treatment group than in the control group after the experiment.

The difference between treatment control value and control value may also be caused by normal sampling variability or deviation from the randomization procedure (Ahmed & Elaraby, 2014). The staff recording the data may have intentionally recorded the wrong information or entered the wrong data. For an instant, the average number of years for the control group may be different from the one stated in the example. Staffs that are not diligent in their work may also miss recording data or interchange during recording.

3 (c)

To avoid variation in the outcome measure should be put in place so as to promote integrity among staffs. Only staffs that are careful and diligent should be allowed to conduct a survey and record the data to be used during the experiment (Li & Kannan, 2014). The data collected should be random and free from any biases. Biased data result in the ineffectiveness of the experiment and the outcome cannot be used by the management when making decisions.

3 (d)

d (i)

Control Group

Treatment Group

People

Customers

Customers

Characteristic 1: Active internet user

35

35

Characteristic 2: Mid-class income

47

47

Characteristic 3: Resides in town

21

21

d (ii)

Control Group

Treatment Group

Observed behavior before treatment:

30

30

Observed behavior after treatment:

32

40

It can be concluded that the control group and treatment group were ineffectively randomized. The manager realized that after giving a reward to the customer, the level of sales increase and this will increase profitability. After the treatment, the number of customer raises from 30 to 40 showing that giving rewards to customers is effective in increasing sales. However, the increase in sales is not permanent and managers should look for a better method of advertising other than giving rewards.

d (iii)

The experiments show that people are affected by stimuli like rewards and bonuses. In the advertising campaign to gain more customers, companies use bonus, rewards, and discounts and reduced cost so as to attract more customers. Individuals make decisions so as to benefit from the rewards and bonuses promised by the seller. The increase in the sale may not indicate growth in the market but rather may show that the customers are enticed to make purchases.

Since the number of a sample was picked when there is a stimulus, it will be necessary to conduct a follow-up study when there are no such stimuli so as to determine in the customer campaign is effective or not.

References

Ary, D., Jacobs, L. C., Irvine, C. K. S., & Walker, D. (2018). Introduction to research in education. Cengage Learning.

Mullen, J., Campbell, J., & Reynolds, M. (2018). 1345: Bed Frame And Mattress Surface Use Among Pediatric Critical Care Patients. Critical Care Medicine, 46(1), 656.

Zhong, M. C., Li, M. J., & Du, W. J. (2015). Can environmental regulation force industrial structure adjustment: an empirical analysis based on provincial panel data. China Population Res Environ, 25(8), 107-115.

[1] Mullen, J., Campbell, J., & Reynolds, M. (2018). 1345: Bed Frame And Mattress Surface Use Among Pediatric Critical Care Patients. Critical Care Medicine, 46(1), 656.

[2] Mullen, J., Campbell, J., & Reynolds, M. (2018). 1345: Bed Frame And Mattress Surface Use Among Pediatric Critical Care Patients. Critical Care Medicine, 46(1), 656.

[3] Mullen, J., Campbell, J., & Reynolds, M. (2018). 1345: Bed Frame And Mattress Surface Use Among Pediatric Critical Care Patients. Critical Care Medicine, 46(1), 656.

[4] Ary, D., Jacobs, L. C., Irvine, C. K. S., & Walker, D. (2018). Introduction to research in education. Cengage Learning.

[5] Ary, D., Jacobs, L. C., Irvine, C. K. S., & Walker, D. (2018). Introduction to research in education. Cengage Learning.