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Transcript of CapSim Presentation
Price in the mid-range
High capacity (avoiding second shift)
100% Awareness & Accesibility
Attempt to get high market share
Avoid borrowing $$ by selling stock What worked: High automation = Low Production Costs Low production costs = Friendly Prices Friendly Prices = More Customers More Customers = More Sales More Sales = More Revenue More Revenue = More $$$$ Our strategy put us in 4th place, overall What Didn't Work: Our products weren't always up to standard. Second product (high tech) didn't get produced until late in the simulation. High capacity wasn't achieved until late in the simulation. High automation led to long R&D projects, which equals more money spent on them. The Rounds! 1. 2. 3. 4. 5. 6. 7. 8. Positives of Strategy: 1. Cheap initial products
2. Fast R&D
3. Focus on only 1 product (easier to manage)
4. Quick and efficient decisions Negatives of Strategy: 1. A lot of money spent on advertising and after purchase services
2. Lower revenue due to only 1 product in the market
3. A lot of money spent on buying automation & capacity
4. Low stock price What we learned: 1. Automation is very expensive
2. Having only one product at the beginning saves a lot of money
3. How to do the round calculations correctly
What we did: 1. Changed the MTBF for Able (our only product) to 19,000 (from 21,000).
2. Changed price of Able to $33.50.
3. Raised Promo and Sales each to 2,100.
4, Changed sales forecast to 1,100.
5. Changed schedule to 1,320. 6. Buy/Sell capacity remains the same.
7. Automation is changed 4.5.
8. Issued $4,000 in stock. What we did: Positives of Strategy: Negatives of Strategy: What we learned: 1. Decided to create a new product (high tech) called Avant.
2. Cost for that product: 1,826,000.
3. Mean Time Before Failure for Avant: 1,700.
4. Performance for Avant: 11.1.
5. Size for Avant: 9.3.
6. Added $100,000 in Promotion and Sales Budget.
7. Changed price of Able to $34.05.
8. Increased automation to 6.5.
9. Bought 200 capacity for Able.
10. A/P lag reduced to 10 days.
11. Increased Able production to 1,580.
12. Sold $6,000,000 of stock. 1. Bought more capacity so we wouldn't have to resort to a second shift.
2. Increased price of Able to bring in more money.
3. Changed the size and performance of our product to keep it in the best position on the perceptual map. What we did: Positives of Strategy: Negatives of Strategy: What we learned: 1. Upgraded Able by .6.
2. Changed sales forecast to 1600.
3. Changed production schedule to 1750.
4. Bought 800 capactiy for Avant.
5. Bought 2.5 automation for Avant.
6. Bought 200 capactiy for Able.
7. Bought 1.5 automation for Able.
8. Sold $10,618,000 of stock. 1. We didn't have to use second shift because of the capacity we bought.
2. We brought in some profit from the stocks we sold. What we did: Positives of Strategy: Negatives of Strategy: What we learned: 1. Increased Able's performance by .5
2. Decreased Able's size by .5
3. Set sales forecast to 2000 for Able.
4. Produced 1762 of Able, since we had 188 left.
5. Bought 300 capacitiy for Able.
6. Filled up automation to 10 for Able.
7. Bought 200 capacity for Avant.
8. Increased Avant's automation to 7.
9. Sold all stock ($16,917,000)
10. Decided not to borrow money.
11. Put in $20,000 worth of bonds.
12. Changed A/P Lag days from 5 to 30. 1. By not borrowing any money, we didn't have to worry about paying interest.
2. Increased capacity and automation to reduce labor costs. What we did: Positives of Strategy: Negatives of Strategy: What we learned: 1. Added .5 performance to Able.
2. Decreased Able's size by .5.
3. Added .7 to Avant's performance.
4. Decreased Avant's size by .7.
5. Changed Able's price to $34.05
6. Changed Avant's price to $42.
7. Bought $2,500,000 worth of Promo and Sales Budget for Avant.
8. Increasing Able’s Sales Budget to $3,000,000 What we did: Positives of Strategy: Negatives of Strategy: What we learned: 1. Couldn't edit R&D for Able this year, because it was already under revisement
2. Increased Avant's performance by .7.
3. Decreased Avant's size by .7.
4. Set Able's sales forecast to 2000.
5. Set Avant's sales forecast to 1000.
6. Kept the same amount of inventory on hand to make sure we can have 1,000 units left over.
7. Sold all of our stock. What we did: Positives of Strategy: Negatives of Strategy: What we learned: 1. Could not edit any of our products because of automation levels.
2. Changed sales forecast for Able to 1800.
3. Changed sales forecast for Avant to 1000.
4. Sold all stock. What we did: Positives of Strategy: Negatives of Strategy: What we learned: 1. Changed Able's performance to 9.5.
2. Changed Able's size to 11.
3. Changed Avant's performance to 13.2.
4. Changed Avant's size to 7.2.
5. Reduced Avant's promo budget to $1,400, which would keep awareness at 100%.
6. Kept the effect on labor cost the same.
7. Decided to produce 733,000 of Able.
8. Decided to produce 851,000 of Avant.
9. Sold all of our stock, which turned out to be $56.5 million. 1. Creating a new product would cost a lot of money.
2. Buying more automation will also make us spend more.
3. Raising the price of Able could possibly push some customers away. 1. We need to buy capacity early on to make sure we don't exceed into 2nd shift.
2. Due to high automation, and usage of 2nd shift, Avant will take longer to come out.
3. Other teams are also making new products, which may come out sooner than ours. 1. A dispute about whether or not we should risk going into 2nd shift to bring in more money.
2. The automation slows down the production rate.
3. Avant cannot be released or edited for a while. 1. Plan rounds ahead of time to make sure we know the outcome of our decisions.
2. Other groups are focusing on both high tech and low tech.
3. Buying more capacity and automation early on will help us hold more of our products and stilll save money.
4. We do not want to borrow money, only because of the interest we have to pay off. 1. Buying automation is expensive when our main goal is to bring in money.
2. Even though we spend a lot on automation, it may help us in the long run when we can avoid labor costs. 1. Halfway through the competition, we still have automation we need to buy.
2. We may need to resort to borrowing money. 1. Increasing the price will bring in more money.
2. We no longer need to spend money on automation.
3. Selling as much stock as we can will bring in some more money. 1. Increasing the price can cause us to lose customers.
2. We are spending money on promo and sales budget when we should have first looked to see how much it would bring in.
3. We were forced to take out an emergency loan. 9. Changed Able's sales forecast to 2,000.
10. Changed Avant's sales forecast to 800.
11. Changed Able's scheduling production to 1,728.
12. Bought 1500 capacity for Able.
13. Bought 10 automation for Able.
14. Changed production to 701 for Avant.
15. Bought 1,000 capacity for Avant.
16. Bought 10 automation for Avant.
17. Sold all stock 1. Spending money can bring in money.
2. If we work on increasing the price of stock, we will bring in more money.
3. Customers will be happy with the bare minimum. 1. Not editing Able can hurt us based on the revisions we could've made.
2. Some groups have over 2 products, while we only have two that are still being edited.
3. Since we took out an emergency loan last round, we had to look at everything again to see what we needed to change.
4. Took out an emergency loan. 1. By focusing on our inventory, we were able to calculate and make sure we weren't going to stock out or make too much.
2. We found that instead of borrowing money, selling stock was cheaper for us to fund our plant improvements.
3. We were able to keep Avant on the cutting edge of the market. 1. We learned that we have to really watch how much money we spend and what we are doing so we don't take out another emergency loan.
2. Two products on the market can do just as well as 3 or 4. 1. We were able to keep a large part of the market.
2. We found that we could increase the production of our products and not go into second shift.
3. Selling all of our stock could prevent us from taking out another emergency loan. 1. We had to be extra careful that we wouldn't take out another emergency loan.
2. With our production slow, we cannot always keep our products on the cutting edge. 1. We found that if we edit our products now, they will come out after Round 8.
2. Automation can hurt if you don't see the effects later on. 1. By reducing the promo budget, we saved money and still kept awareness at 100%.
2. We could change the size and performance of our products to keep them cutting edge.
3. Produced a lot of our products so we could bring in enough money. 1. Didn't realize we could decrease our promo budget early on.
2. Products were not cutting edge last round, which lost some of our customers. 1. We can keep awareness at 100% and not have to spend as much money.
2. Keeping our place in the market is important to our income. How Our Group Survived The Madness!! In The Beginning...... 1. We divided out the different sections of the business and looked at everything we needed to do as a whole.
2. Learned all of the content and the math behind the business
3. Found our strategy. What could've been done differently? During The Business... 1. To make decisions, we came to a consensus.
2. We wanted to be able to agree on everything we were doing, especially if we were going to be stuck doing this together. In The End.... 1. Helping each other with the decisions worked out well.
2. By making sure we all understood every section, we didn't have to waste time searching for information later on.
3. Staying organized helped us put everything together.
1. Made a calendar of all of the changes we wanted to make throughout the simulation
2. Documented all of the income, profit, and expenses in order to be able to predict and avoid Big Al.
3. Stay calm! Freaking out didn't help us, especially when we could have seen it all coming! Approach for... Finance: We attempted to just have enough money in order to fund everything we wanted to accomplish this round. R&D: For this round, we wanted to create our first product to the specifications of the customers, and keep it right where they want it Production: We were planning on buying as much automation and capacity as money allowed, in order to avoid as much of 2nd shift as possible, and to make our product cheap. Marketing: We tried to figure out just how much money needed to be spent on Promo and Sales budgets to hit our awareness goals, and to set an affordable, but profitable price. Our Approach... R&D: This round, we planned on improving our current product, Able, and begin development of our second product, called Avant. We waited until this round in order to have some breathing room with the profit from the last round. We were attempting to now break into the High Tech market. Marketing: We kept our marketing section pretty much the same as last round. Our approach was just to maintain our 100% awareness, and high accessibility. Production: Like last round, we got as much automation and capacity as money allowed, for the same reasons as last round. We also attempted to produce the correct amount of units, in order to have just a few leftover, but not stock out. Finance: Same as last round. We sold all of our stock to fund our expenses, and we still strayed away from borrowing money. Our Approach... All of our sections for this round had a very similar approach as last round. The only major difference is that Avant is still under manufacturing, and that we already bought capacity and automation for it. Our Approach... R&D: Avant finally came out this round, so we went back to regularly updating both Avant and Able to keep them right where the customers want them. It will be like this for the rest of the rounds.
Marketing: We changed our approach a bit for marketing this round. We realized that we were spending a lot more money than needed on promo budget to achieve 100% awareness, so we reduced that to amount that would be just enough to give us that much. That part of marketing will remain the same through the rest of the rounds.
Production: Since Avant is now out, we chose to produce it conservatively, in order to avoid an emergency loan. The same goes for Able. We also kept on buying more automation and capacity, all in order to keep the product cheap, and stray away from second shift.
Finance: Same as last round. Sold stock, avoided borrowing money, but we did give out some long term debt so that we can fund our last steps towards full automation. Our Approach... R&D: The same
Marketing: This round, everything stayed the same, aside from the price for Able. We lowered the price about a dollar, in order to bring in almost 100,000 more sales, and it seemed to us like a good trade
Production: Same as last round, but we also capped out automation for Avant.
Finance: Same as last round, except we didn’t issue any bonds.
Our Approach... R&D: Same as last round
Marketing: Same as last round
Production: Same as last round
Finance: Same as last round
In Conclusion...! Listen to us talk! What are all these numbers?! What do they mean?!? Let me explain it to you! R&D - Performance, size and MTBF. In other words, we had to calculate the specs of our sensors! Marketing - Promotion and sales budget, price of sensors, and sales forecast. In marketing, we calculated how much to spend on the advertisement, after-purchase services, and how much to actuall produce of our sensors. Production - How many units to be produced, production schedule, leftover inventory, and cost of carrying inventory. To put it simply, in this section, we crunched the numbers for how many units we need to actually produce in order to fulfill our share of the market, taking in consideration cost, time and how much inventory we already have on hand, and how much it is costing us to hold it. Finance - Total capital neede for round, $$ due this year (including interest), A/P Lag days, and capital structure. In finance, we made calculations to figure out how much we are spending, how we are going to pay for those spenditures, what we owe, what own, and what we need.