Research Into Paracetamol

Research Into Paracetamol The pharmaceutical industry was estimated to turnover 773 billion in 2008, however not all of this revenue was taken as profit; a significant cost goes into research and industry guideline compliance for products. With regards to new generic medications, proving bioequivalence is crucial to success, however necessary in vivo testing can be costly ((EMAMI). Drugs which meet a certain Biopharmaceutics Classification System criteria may be exempt from these expensive tests and may be permitted a biowaiver (2). This allows in vitro dissolution testing in place of in vivo plasma analysis. Paracetamol is one such drug that has qualities which place it at the borderline of biowaiver suitability (2). It is the worlds most commonly used analgesic (3), although the question arises as to whether all preparations as effective as each other? More specifically we ask, is there is any significant difference between the dissolution profile of paracetamol generics? This literature review is in prepar ation of experimental tests designed to ascertain if there is any difference in dissolution profile of eight PBS listed bioequivalent prepararations, and whether this difference may correlate to a clinical significance in such a common place drug, used by so many. Search Strategy All data was sourced through internet databases, i.e. Medline, Pubmed, and Cochrane Library. The search engines Google Scholar and UWA library were also utilized. Keywords included. KEY WORDS Paracetamol, acetaminophen, bioequivalent (therapeutic equivalency), Delayed-action Preparations, Pharmaceutical Preparations, Tablets, Drug Compounding, Chemistry, Pharmaceutical, Observer Variation, Dissolution, Metabolism, In vitro, Drug Content, IVIVC, In vivo, Bioavailability and Correlation. Once appropriate articles were sourced, citing and cited articles were also evaluated. Paracetamol History Paracetamol (acetaminophen) is one of the worlds most popular drugs for the treatment of pain and fever (3). It was first synthesized in 1878 by Morse, and was used clinically for the first time in 1887 by von Merring (3, 4). Paracetamol fell into obscurity shortly thereafter in favour of other chemically related drugs such as phenacetin (4). However, phenacetin was later found to be nephrotoxic, and the search for a substitute arose (4). In 1950, a study from Brodie and Axelrod rediscovered paracetamols suitable analgesic properties (3). Although, this drug did not experience widespread acceptance until the 1970s due to unfounded concerns about safety; but from then on, it became the most commonly used medication for pain (3). In many countries, such as the United Kingdom, paracetamol sales have exceeded those of aspirin since 1980 (3). Physicochemical properties Paracetamol or N-(4-hydroxyphenyl) acetamide, is a white crystalline powder with a melting point of 168-172C (Martindale). It is sparingly soluble in water, ie. one part of paracetamol is soluble in 70 parts of water at room temperature (2). It is also freely soluble in alcohol (Martindale) Paracetamol shows maximal UV absorption at a wavelength of 249nm and is reported to have a pKa of 9.5 at 25C (2). Pharmacology Pharmacokinetics (inc. therapeutic index toxicity) Pharmacodynamics Mechanism of Action The exact mechanism of action of paracetamol has remained largely unknown for some time (5-8). For years it has been thought to inhibit the enzyme cyclooxygenase (COX) in a similar manner to non-steroidal anti-inflammatory drugs, however definitive proof of analgesia and antipyresis being dependent on COX inhibition is still lacking (3). Recently, two independent groups have produced experimental data that has demonstrated that analgesia involves the potentiation of the cannabinoid vanilloid tone in the brain and in the dorsal root ganglia (3). Blockade of cannabinoid (CB1) receptors in rats has eliminated any analgesic properties of paracetamol and suggests that paracetamol is in fact a cannabinomimetic (3). Pharmacokinetics Absorption Bioavailability Paracetamol has been reported to have a bioavailability of 62%-89% in those of a fasted state (2, 7). This divergence from absolute bioavailability is attributed to first pass hepatic metabolism. Peak plasma concentrations are reached between 0.17-2.0 hours post-dosing (9). As expected, food has been shown to reduce absorption by increasing tmax and decreasing Cmax values. Food has not been shown to affect the amount of acetaminophen reaching the blood (2). Distribution Paracetamol has a reported volume of distribution of 0.69-1.36L/Kg (10). Around 20%-25% of the drug is bound to plasma proteins at therapeutic dosages, however this value has been shown to increase to 20%-50% in over dosage. Paracetamol has also been shown to cross the placenta, and has a 1.24 milk/plasma ratio in breast milk (2). Paracetamol is an ADEC category A drug, i.e. it is safe to use in pregnancy, as well as breastfeeding (8). Metabolism Excretion Around 85%-90% of paracetamol is metabolized within the liver via the process of glucuronidation and sulfation (2). These inactive metabolites are then eliminated by the kidney in the urine. Approximately 5% of paracetamol is passed out unchanged in the urine, the remaining drug is conjugated with cysteine and mercapturic acid (2, 7). The half-life of paracetamol has been reported as 1.9 4.3 hours (2, 7, 9) but longer in those with renal impairment. Indication Paracetamol is indicated in the symptomatic treatment of mild-to-moderate pain as well as fever (2, 8) and has also been described to have mild anti-inflammatory properties (2). Dose Dosage Forms For adults, the optimal single dose of paracetamol is 1g (2, 8), with a maximum dose of 4g daily (8). Hepatocellular necrosis can occur from doses of 10-15g, and death may result in doses in excess of 20-25g (2). Paracetamol is available in many dosage forms, as a single active pharmaceutical ingredient (API), or in combination with other analgesics such as codeine (Panadeine), dextropropoxyphene (Di-Gesic), metoclopramide (Metomax), as well as in combination with decongestants such as pseudoephedrine in cold-and-flu preparations (8). This drug is available as immediate release (IR) tablets, sustained release (SR) tablets, chewable, elixirs, IV injections and suppositories (8). Biopharmaceutics Classification system (subtitles ) Drug dissolution is an essential component in the absorption of any pharmaceutical tablet The Biopharmaceutics Classification System (BCS) is a method of grouping active pharmaceutical ingredients (API) based on their solubility and intestinal permeability (reference? WHO, amidon, FDA, lobenberg, dahan). It allows for easy identification of those drugs whose in vivo absorption can be easily anticipated based on their in vitro dissolution. (many amidon) The system relies on the premise that drug dissolution, and therefore solubility, as well as drug permeability are the rate limiting steps in drug absorption. (amidon, rang + dale, goodman and gilman, dahan, WHO, FDA, lobenberg) This implies that two different products containing the same drug will have the same rate and extent of absorption if, over time, they both have the same concentration profile at the intestinal membrane. (amidon) Since it is the dissolution profile of a drug which determines its concentration profile in the intestinal lumen, comparability of this parameter in vitro should produce comparable absorpt ion results in vivo. (amidon) In reality however, only those drugs with high permeability which are formulated into immediate release (IR) preparations can be easily and reliably applied to this logic (amidon, BW, FDA). There are four classes within the BCS to which a drug can be assigned (as outlined in figure ?). Class I is comprised of those drugs with high permeability and solubility, these drugs are expected to be well absorbed and, providing dissolution is slower than gastric emptying, show a good correlation between in vitro dissolution rate and the rate and extent of in vivo absorption (IVIVC) (amidon, FDA, BW). Class II drugs also have high permeability but their solubility is low which ensures in vivo dissolution is the rate limiting step in drug absorption and thus IVIVC is expected (amidon). Class III drugs have a low permeability with high solubility, traditionally these drugs were believed to have little or no IVIVC (amidon), however recent studies have shown that if a class III drug is very rapidly dissolving then a correlation may exist (Cheng, Jantratid 1). Finally Class IV drugs have both low permeability and solubility these drugs are not expected to show any IVIVC (amidon). Figure ?: (http//www.tselinc) For each of the four BCS classes a drug substance is considered highly soluble when the highest [IR] dose strength is soluble in 250mL or less of aqueous media over the pH range of 1-7.5. (FDA) The permeability of a drug is considered high if greater than 90% of a dose is absorbed across the intestinal membrane (FDA, Yu). The genius of the BCS is that it allows easy identification of drug candidates for which relatively cheap and fast in vitro dissolution testing can replace the more expensive, time consuming and invasive in vivo absorption testing (emami). The system does away with complex modeling that must account for fasted and fed states as well as cyclical changes in motility and gastric emptying. (amidon, dahan) The impact of the BCS on the pharmaceutical industry was so great that in 2006, creator Dr. Gordon Amidon was awarded the International Pharmaceutical Federation (FIP) Distinguished Scientist Award. (internet reference) Correlation between in vitro dissolution and bioavailability Following the introduction of the BCS a great deal of research was conducted exploring the power of IVIVC. It became a main focus not just of the pharmaceutical industry but also of academia and regulatory authorities (emami). IVIVC became popular because it can be used as a substitute for resource intensive bioavailability testing; the concept has essentially improved the speed and cost of drug development as well as quality control in pharmaceutical manufacturing (emami). Bioavailability and Bioequivalence Bioavailability is an important concept because it determines the efficacy, safety and reproducibility of the therapeutic effect of drugs and the many formulations in which they come (TGA). For the purpose of drugs that produce a systemic therapeutic effect, the Australian Therapeutic Goods Administration (TGA) (TGA) defines bioavailability as the extent and the rate at which a substance or its active moiety is delivered from a pharmaceutical form and becomes available in the general circulation. Bioavailability is therefore inherently linked to drug absorption and may also be predicted using IVIVC as defined by the BCS. If two pharmaceutically equivalent (same active ingredient and content in the same formulation) products have the same bioavailability they are considered bioequivalent and will essentially have the same efficacy and safety. Bioequivalence is important because it is the basis for which innovator medicines can be substituted with generics. Strength of in vitro in vivo correlations The BCS is a predictive tool for determining which drugs will have an IVIVC. Table ? demonstrates that under the BCS only class II along with some class I drugs are expected to have IVIVCs (amidon). Research subsequent to Dr. Amidons first BCS publication has generally upheld his initial findings however exceptions to the rule have been found. Table ?: IVIVC Expectations for Immediate Release Products Based on Biopharmaceutics Class (amidon) Class Solubility Permeability IVIVC Expectation* I High High IVIVC if dissolution rate is slower than gastric emptying rate, otherwise limited or no correlation II Low High IVIVC expected if in vitro dissolution rate is similar to in vivo dissolution rate, unless dose is very high III High Low Absorption (permeability) is rate determining and limited or no IVIVC with dissolution rate IV Low Low Limited or no IVIVC expected *A limited correlation means that the dissolution rate while not controlling may be similar to the absorption rate and the extent of correlation will depend on the relative rates. Drugs with IVIVC The BCS suggests that if the bioavailability of a drug is dissolution rate limited then a good IVIVC should be possible. This notion has been demonstrated for flutamide a very poorly soluble high dose compound which is not expected to have IVIVC but has dissolution rate limited absorption (posti). A paper published by Posti, Katila Kostiainen(posti) concluded that there is a strong IVIVC for flutamide and this was identified on four separate occasions where bioavailability was studied. All four studies were of single dose, cross over design and each subsequent study increased the number of subjects tested (study I: n = 6, Study IV: n = 24). The strength of the papers methodology provides good support for its conclusions however this was undermined by a lack of documented statistical analysis. Much more compelling evidence comes from a study by Sakuma et. al. (Sakuma) which was able to show an IVIVC for two BCS class I drugs after they received an enteric coating, thus eliminating the possibility that gastric emptying was the rate limiting step. The results were statistically significant however the tablets were tested in rat models rather than human subjects and the dissolution test may not have adequately reflected the in vivo environment that enteric coated tablets are subject to (Sakuma). Further study in human subjects demonstrating the difference in IVIVC between enteric and non-enteric coated tablets could not be identified in the literature. There are hundreds of other drugs which have an IVIVC and these are neither limited to BCS class II drugs or drugs with dissolution rate limited absorption. Theophylline is a BCS class IV drug and yet in a complete cross over study of four different theophylline tablets the in vitro dissolution was able to significantly predict several in vivo pharmacokinetic parameters (AUC Cmax) which dictate bioavailability (varshosaz). The study was small (n = 6) and not all pharmacokinetic parameters could be correlated. Other common drug examples with IVIVC include digoxin (shaw), rifampicin (pahkla), diclofenac (Jantratid 2) and lamotrigine (hiten) and these are by no means exhaustive. Drugs without IVIVC Not all drugs have an IVIVC and this can also include some BCS class II drugs. A research paper by Frick, Moller Wirbitzki 1998(frick) demonstrated that the in vitro dissolution of glimepiride (BCS class II) is not comparable to dissolution in vivo. The study employed a single dose cross-over design with 12 subjects, latin-square statistical analysis was employed and the results are assumed to be significant however not all the data was accompanied by supporting confidence values. No correlation was possible because the solubility of glimepiride is low and strongly pH dependent (frick). Unlike glimepiride ciprofloxacin, a quinolone antibiotic, is classified as a BCS class III drug and as a consequence would not be predicted to have an IVIVC. Correspondingly, when tested for this possibility none could be found between dissolution and any of the parameters for bioavalabilty (Tmax, Cmax, AUC Ka) (khan). Strength of BCS in predicting IVIVC There is a wide variance between IVIVCs that are anticipated according to the BCS and those that are actually demonstrated after experimental testing. Examples have been provided where both expected and unexpected correlation occurs and this suggests that the BCS system while helpful should only be taken as a guide. Laboratory testing is still the only reliable method for determining if a correlation is occurs. Paracetamol is a BCS class III medication and as such is not expected to demonstrate strong IVIVC. Given the fact that paracetamol has a wide therapeutic index and the BCS can only be used as a guide, a safe and useable IVIVC may still exist. IVIVC of paracetamol The prodigious use of paracetamol, vast quantities of the drug manufactured and the presence of many generic products in the marketplace makes it a prime candidate for IVIVC testing. In 1996 Retaco et. al.(retaco) conducted a small crossover study using five subjects to assess whether an IVIVC for paracetamol may exist. The study stated that the absorption data from saliva partially correlated with those found in vitro(retaco), however this is not a valid conclusion. One of the subjects studied produced in vivo data that opposed a correlation and this anomaly was further compounded by the fact that statistical analysis was not performed on the IVIVC but rather covered the in vitro and in vivo data separately. This pilot study was later verified retaco (word document) invivo bioequivalence but not invitro dissolution equivalent Babalola (word document) Cautious use of IVIVC Dominguez IVIVC but not bioequivalent Dont use IVIVC Biowaiver for bioequivalence testing In vivo bioequivalence studies are required to ascertain the risk of therapeutic inequivalence from potential differences in bioavailability. The BCS has outlined properties of solid preparations which require evaluation, i.e. solubility, permeability, and dissolution rate (11). In addition to this, the non-critical therapeutic range of a drug should also be considered (11). It should be noted that products produced by the same manufacturer at the same site are exempt from bioequivalence studies (12). Paracetamol BCS classification relevant properties. Several characteristics must be considered when a drug presents as a candidate for a biowaiver through dissolution testing. Paracetamol is classified as a BCS Class III drug, although it possesses properties which deem it to be borderline Class I (2). Characteristics relevant to the active ingredient Risk of therapeutic failure or adverse drug reactions i.e. the need for critical plasma concentrations. When considering a biowaiver for a drug substance, its therapeutic use and therapeutic index also needs to be taken into account (13). In the case of paracetamol, the therapeutic indications are not critical, and there is a wide difference between the usual therapeutic dose and toxic doses. Given that an optimal therapeutic dose for an adult is 1g, and that hepatocellular necrosis can result from ingestion of 10-15g, it can be assumed that acetaminophen is not a narrow therapeutic index drug (2). Risk of bioinequivalence: Previous evidence of bioavailability problems for an active substance can complicate the justification of in vitro dissolution bioequivalence correlation (11). For paracetamol, the absolute bioavailability has not been shown to vary between therapeutic dose ranges of 5-20mg/kg (2). Other studies have also demonstrated that bioequivalence in different IR paracetamol preparations is achievable (10, 14, 15). Solubility: If a drug is highly water soluble it generally lends to exemption of bioequivalence testing, however polymorphism and particle size are major determinants of dissolution and must be considered (11). A drug is considered highly soluble if the amount contained in a preparation of maximal strength dissolves in 250mL of three buffered solutions ranging between a pH of 1-8 at 37C (11). Paracetamol has a pKa of 9.5 and is therefore not substantially ionized at a pH less than 9. As a result, it can be said that its solubility does not vary with pH (2). The highest strength IR preparation of paracetamol is 500mg. Experimentally, his has been shown to dissolve in 21mL (2), which is significantly less than the 250mL that is required by the BCS guidances to prove solubility (11, 13). Pharmacokinetic properties: High permeability which is typically indicated by a linear absorption pattern, reduces the potential influence of an IR preparation on bioavailability (11). For paracetamol, the permeability is slightly below the cut-off value of 90%, i.e. one study by Stewart et al. (16) found permeability to be 80% once absorbed. This formally excludes paracetamol from being considered for a biowaiver, although extensions to BCS Class III drugs has recently been given more attention (17, 18). Characteristics relevant to the medicinal product Rapid dissolution: Dissolution profiles can be regarded as equal when more than 85% of the active ingredient is dissolved within 15 minutes (11). This comparison must occur between test and reference product in three buffers which with a pH range between 1-8, at 37C (11). Paracetamol tablets have been shown to dissolve within 30 minutes (14), however this rate does not satisfy BCS exemption standards. Excipients: Those included are to be well established and not in atypically large quantities. Kalantzi et al. (2) details a table of acceptable excipients which can be used within paracetamol IR tablet formulations which are considered for in vitro dissolution biowaiver. Manufacture: Critical parameters such as particle size and polymorphism should be addressed and documentation should be provided in the dossier that is submitted to TGA (11). Paracetamol has three metastable forms, the only commercially available from is the monoclinic acetaminophen as it is the most thermodynamically stable polymorph (2). From review of the literature, it can be concluded that in vivo bioequivalence testing of solid, oral IR paracetamol dosage forms may not be necessary. This can be justified given that a formulation can be shown to (2): Rapidly dissolve under USP guidelines Contain only the acceptable excipients, in usual quantities Demonstrates dissolution profile similar to reference product under conditions stated in USP guidelines Other drugs with biowaiver Other drugs have been considered for biowaivers, such as: acetazolamide, acyclovir, amitryptiline, atenolol, chloroquine, cimetidine, diclofenac, doxycycline hyclate, ethambutol, ibuprofen, isoniazid, metoclopramide, prednisolone, prednisone, pyrazinamide, propranolol, quinidine, ranitidine, rifampicin and verapamil (19). A biowaiver was deemed to be appropriate for all these drugs except for acetazolamide (20) and frusemide (21). Interestingly, both these reviews were performed by the same author. Statement of Purpose Aim hypothesis The purpose of the proposed study is to compare the dissolution profiles of allegedly bioequivalent IR paracetamol preparations listed on the PBS. In particular, comparisons between every preparation will be made, rather than a single comparison against a referent. We hypothesize that there will be no significant difference between the dissolution profile of IR paracetamol tablets when dissolved according to USP specifications. Methodology We propose to analyse the dissolution profiles of eight PBS listed bioequivalent paracetamol preparations, namely; APO-paracetamol, Chemmart Paracetamol, Dymadon P, Febridol, Panamax, Paracetamol Sandoz, Paralgin, and Terry White Chemists Paracetamol. Sixteen tablets of each preparation will be dissolved in compliance with USP dissolution test for tablets and capsules, using apparatus II. As mandated, tablets are to be dissolved in 900mL phosphate buffer at a pH of 5.8 with a paddle set to 50rpm. Samples will be taken at intervals of 2,5,10,15,30,45,60 minutes in concordance with practice by Dominguez et al. (22). These aliquots will be examined for paracetamol by UV spectrophotometry at 289nm. These data will be statistically analysed by ANOVA.

Macbeth Good vs Evil Essay

â€Å"Look like the innocent flower but be the serpent under it† â€Å"let not light see my deep and dark desires† â€Å"to alter favour ever is to fear† â€Å"The service and the loyalty I owe† â€Å"Point against point, rebellious arm ‘gainst arm† 1. How are they corrupted by the evil in them? After reaching the highest level success Macbeth still desires more and is willing to fall to any level to achieve it. When the evil presents Macbeth with the opportunity, he puts all his trust in it later to find out evil has played a double game. 2. Is Lady Macbeth totally evil? Lady Macbeth is not evil she is only trying to help her husband in his ambition, she takes support of evil to fulfil her ambition when she pushes Macbeth to kill Duncan and challenges his manhood that she forgets her morals because she is too lost in her ambition. 3. Find examples in the play in which characters try to hide the truth from around them? Macbeth hallucinates about Banquo’s ghost who symbolises Macbeth’s goodness but to hide his guilty conscious he becomes cruel towards others. Banquo hides the prophecy from the rest of the kingdom because he doesn’t believe them to be true, but still doubts Macbeth for Duncan’s murder. 4. Why do they do it? Macbeth hid his 3 prophecies from others because he didn’t know whether it would be true or not and because once he heard that Malcolm will inherit his father’s throne. He and Lady Macbeth planned to kill the king therefore, if people knew about his prophecies they would have suspect him in an instant the King is dead. 5. What does this tell us about the world around them? The world is very small and they would go to any limits to protect themselves and achieve their goals. 6. Macbeth and Banquo’s reactions to the witches’ prophecies are very different. In what ways? Macbeth doesn’t believe at first but when he is promoted he starts to believe and uses the prophecies as guide towards his ambition whereas Banquo never believed in the witched and always thought they were evil. 7. What are the different consequences of their attitudes? Macbeth believed in evil and let it guide him into an instant of success which eventually leads him to his own destruction, death. Banquo doesn’t believe in evil and let good guide his way, but is murdered by Macbeth because he was so good that Macbeth got scared for his safety. 8. Would you consider Macbeth’s ambition to be flaw in his character? Macbeth ambition is too great for him to handle, and he put all of his trust on those prophecies which lead to his downfall. Those prophecies can be seen as hallucination and instead of trusting his surroundings, his friends. 9. What about Lady Macbeth’s ambition? Is she ambitious for herself or her husband? Lady Macbeth’s ambition only started when she got the letter from Macbeth and she wanted to help her husband make the prophecies come true. The only thing that’s in the way to make the prophecy came true is Malcolm. 10. What has the play got to tell us about selfish, unchecked ambition? The play tells the audience that being selfish will display and illusion success would disappear if the person stops to feel human emotions. 11. Why does Banquo’s ghost only appear to Macbeth during the banquet? Banquo’s ghost only appeared to Macbeth during the banquet is because it was Macbeth’s conscience and guilt that take shape to form Banquo’s ghost. No one else in the banquet knew that it was Macbeth who plotted his friend’s death. 12. What does this tell us about Macbeth’s conscience? It tells us that Macbeth is guilty of the crimes he had committed, and soon realises that once his left alone no one he could trust, like Banquo. 13. Find examples in the play to comment on this theme When Duncan is King of Scotland, it seems that the place is peaceful and everyone can trust each other. Whereas when Macbeth is King there are chaos everywhere and people couldn’t trust each other because they afraid that the other person might be Macbeth’s spies and their lives would be in danger if they said anything against Macbeth. 14. Consider Banquo’s sense of honour Banquo might as well be a little responsible for Duncan death because he hide the prophecies from the kingdom though he always remained loyal to his serving king. 15. Why is Malcolm so suspicious of an honourable character like Macduff? Malcolm was so suspicious of Macduff because the former Thane of Cawdor was an honourable man and yet he betrayed Duncan. Malcolm wanted to make sure that when he would be surrounded by trustworthy and loyal Thanes and not the ones that would be power hungry like Macbeth. 16. Review and list again the qualities Shakespeare thinks are needed by a king to govern a country Honesty Kind Fair Loyalty Generosity Courage 17. List the things that are not what they seem to be, and people whose reality is different from their appearance †¢Duncan visits Macbeth’s castle and was amazed at the view of the castle but didn’t know that Macbeth and Lady Macbeth plotted to kill him. †¢The old Thane of Cawdor seems like he’s very noble but he ended up being a traitor. A dagger – A A wood – B False promises – A A ghost – A Two guilty grooms – A A wicked prince- A A ‘foul and fair’ day – B.

Cheat Sheet MDM Risk analysis

Decisions based on them are dangerous! A single point only ever tells us what the average of two cases is, never what happens between the two cases! Poor understanding of downside risk poor understanding of upside opportunity 2) Scenario analysis: Define your scenarios; best-worst-base There are a range of results!Check if risk makes a difference 3) Use distributions for the uncertainties to describe key risk drivers Choose distribution based on historical data or expert opinion Distribution is important for the simulation; based on the given distribution, the simulator ill be more/less likely to pick numbers in specific ranges Uniform: same probability of all numbers in a given range Triangle: point within the range is much more likely than the other points Normal: you know the middle point but it could be off by X in either direction 4) Run (at)Risk (Monte-Carlo simulation) Define distributions (step 3) Define output cell fir which to simulate results Things to look out for Mean of objective variable (usually NAP) Compare results with scenario results (atria's will give better indication of the range than the scenarios! Look at full range of outcomes Look at standard deviation and at confidence range Look at downside risk and upside potential. What is % of being above/below specific number? What is breakable probability? What is the distribution like? Perform Monte-Carlo simulation to Evaluate different possible outcomes Determine expected result, range of results, probability of results (e. G. Probability of break-even), downside risk, etc.. Advantages: avoid the Flaw of Averages, understand the risk, test your intuition 5) Sensitivity analysis Purpose Examine sensitivity of results when model parameters are varied Observe change in results due to change in assumptionsIdentify main uncertainty drivers / key risk drivers Methodology What-if analysis (simple changing of numbers to see what happens) One-way & two-way sensitivity analysis Tornado diagrams One-wa y & two-way sensitivity analysis Use one-way sensitivity analysis (data table) to check how changes to a variable effect the output variable. Use Goal Seek to find breakable point of that variable. Use two-way sensitivity analysis (data table) to check for changes in two different variables at the same time Tornado diagram Check for impact of each variable / parameter, sorted in order of magnitude Shows you on which variables you should focus most, where the most important risks lie! Some Excel info points: Simulation settings: EXAMPLE QUESTIONS ON RISK ANALYSIS 1 .In what type of decision context could risk analysis be useful and why may it be dangerous to rely on single point forecasts? What techniques can you use to overcome the problems of such forecasts? How do you decide what technique is most appropriate to use? Every business decision entails risk dangerous! A single point only ever tells us what the average Of two cases is, never what happens between the two cases! Example answer for this part: These numbers are based on the average scenario which is not necessarily representative of the true value (argue why could over- or underestimate). Furthermore, they do not tell us anything about the risk.Technique: scenario analysis or simulation 2. Explain in your own words how Monte Carlo Simulation could be useful to a decision maker Evaluate different possible outcomes Averages, understand the risk, test your intuition 3. Explain how the simulation process works to produce results that are useful to a decision maker Example answer: This is different from the E,250 that Carolina's predecessor estimated because the original estimate was made using only single-value estimates for each of the variables.However, by using a Monte Carlo simulation that allows for a range of possible values (with a triangular distribution to account for the higher likelihood of the values Of 5% and 20% for economy and business, respectively). This means that, based on 1 ,OHO ite rations of possible combinations for each of the variables as per the arranging definition of the potential values for each variable under each iteration, the mean of the cost is E 10,277. 4. A friend of yours has just learned about simulation methods and has asked you to conduct a complicated risk analysis to help her making a choice. She said she would be happy to let you solve the problem and then recommend what action she should take. Explain why she needs to be involved in the analysis and modeling process and what kind of information you need from her.Risk analysis requires information about the characteristics of a particular uncertainty (e. G. Shape of probability striation function, range of likely values etc) 5. A simulation model has produced the following three risk profiles displayed below. What advice would you give to the decision maker on the basis of this output? Choice depends on risk attitude, personal wealth, importance of project success and cost of investment a lternative. Alternative C has the highest associated payoff. However, range of possible payoffs is quite large. The steeper the shape of the probability distribution function, the smaller the range of possible expected payoffs (look at standard deviation of outcomes).Consider 5% confidence interval of most likely payoffs. Alternative A has quite a big confidence interval with relatively flat slope at the edges. Look at intersection of B and C and argue which one is less risky. 6. Your boss has asked you to work up a simulation model to examine the uncertainty regarding the success or failure of five different investment projects. He provides probabilities for the success of each project individually (numbers given). Because the projects are run by people in different segments of their investment market, you both agree that it would be reasonable to believe that, given these probabilities, he outcomes of the projects are independent.He points out, however, that he really is not fully confident in these probabilities and that they could be off by as much as 0. 05 in either direction on any given probability. (a) How can you incorporate this uncertainty about the probabilities in the simulation model? Use normal distributions for each project with Sd= 0. 05 (b) Now suppose he changes probability to include ranges. How can you update your simulation model to take this additional information into account? Update probability distributions – triangle, discrete, uniform, normal Example answer: He should use historical data and his expert judgment to estimate the distribution of inputs. He should apply a normal distribution if the different values are independent of each other.Example for normal distribution argument: However, since the number of high quality applications is the sum of the individual decisions â€Å"whether or not to apply/' of a substantial amount of high caliber young professionals, and since this decision is taken by each potential applicant to a large extend independently of each other, the normal distribution with mean 630 seems reasonable. Moreover, given the potential range of high quality applications is between 51 0 and 750, a standard deviation of 60 seems reasonable; that is, the range of 240 students corresponds to 4 standard deviations. Since the proportion of offers accepted is again the sum of many individual decisions, the normal distribution with mean 58% and standard deviation of 2% might be reasonable. 7. Interpret the following risk analysis result tables ask at: Minimum, expected, maximum, P(loss) = x % (downside risk), P(> X) = Y% (upside potential) 8. Interpret sensitivity analysis Describe how output variable is sensitive to given assumptions/parameters.Describe how output variable minimizes and maximizes with the different scenarios; what is the upside potential and downside risk Example answer: The total cost decreases by El ,800 for each 5% increase in the business class no-show rate from 15% to 20% (at which point it is minimized), but then increases by E,700 per percentage point increase from 20% to 30%. The rate Of increase is consistent regardless of the rate of economy no-show. (could include more insights!!! ) The two-way sensitivity table and the accompanying chart show us that in the lower ranges of the possible no-show rates, the total cost is sensitive to both variables in fairly similar proportion, until the optimum combination (I. E. The minimized cost) is reached at 5% economy and 20% business. After this inflection point, the total cost becomes much more sensitive to changes in the business class no-show rate. 9.Describe, compare and explain the shape of a distribution. Risk profile: probability of making a loss vs. a profit Minimum versus maximum Variance Size of 90% confidence interval around the mean Expected return mean average) Include arguments why distributions might differ with different scenarios 1 0) Make recommendation based on the results. Will us ually be trade-off between high risk for higher return on average and lower risk for lower return on average Include risk profiles, probabilities, maximum and minimum numbers†¦ Example answer: The policy that we have recommended is better than the others, because it has the lowest average total cost.Furthermore, the 95% confidence interval has the narrowest range of possible values, as well as the lowest probability that costs will exceed El 7,000. However, even though our recommended policy is better overall, it is not necessarily going to be the best on each individual flight. However, this doses t matter since the average cost is the single most important criterion when choosing a policy because you have 365 * 4 flights per year. One additional insight you could generate is the simulated cost difference between the current and suggested policies. The new policy is worse than the original policy 6% of the times. 1 1) What can be further done to improve profitability and manag e the risks involved?

The Virgin Group Virgin America Inc. - 1511 Words

The Virgin Group, is a British international corporation conglomerate founded by entrepreneurs Sir Richard Branson and Nik Powell in the 1970. Today, the Virgin Group, operates in 13 regions internationally, in seven industries with a net worth valued at $4.9 billion (Virgin, n.d.). Although, the Virgin Group is made up of several largely diversified companies, for the general purpose of this assessment, we will concentrate on the airline sector of the Virgin Group. Virgin-branded airlines include: Virgin Atlantic, Virgin Galactic, Virgin Australia and Virgin America. In this analysis, we will take an in-depth look at the external, internal and SWOT analysis for Virgin America Airline. Virgin America Virgin America Inc., is an American†¦show more content†¦Virgin America invests a great deal into its staffing and development as they recognize that they are key in delivering the â€Å"Virgin Experience† to all its passengers. Providing world-class training and ongoing training throughout the years by hosting special educational events, even teaching staff sign languages so they are better able to assist disabled passengers. With a distinctive and innovative management style, it serves as one of Virgin’s tangible resources. Virgin’s Hand-off approach to management empowers its employees to take personal ownership in the overall success of Virgin America, promoting organic growth both internally and externally; moreover, is said to be the root cause for its overall success (Grant, 2012). Physical Resources, Virgin America is one of the youngest fleets within the U.S. airline industry at only 10 years comprising of 63 wide-body planes for its long term operations. Airlines SWOT Analysis 4 The Virgin Group owns land, property, plants, equipment and cross industry success. Investing in its fleet with Airbus and taking the corporation public grossing millions in revenue. 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