Flashcards in Capsim Questions Deck (35):
Plant utilization - what does low plant utilization mean?
actual output/total output (%)
Total output is capacity (not times two)
So max Plant utilization is 200%!
Low plant utilization - not producing at full capacity
First shift and second shift
First shift capacity = capacity next round
Second shift = first shift * 2
Total Plant capacity for high tech
2 x capacity next round (Sum)
Inventory Carrying costs
Where can you see if product stocked out?
• Inventory carrying costs = 12% rate
if product stocked out, there will be 0 inventory carrying costs
How much is 2nd shift paid?
50% premium over first shift
How much does labour increase every year
5%, but automation decreases labour costs by 10%
How to tell if overproduced or underproduced using potential vs actual chart?
Overproduced - CANNOT TELL
Underproduced - below potential
if asking as a % of sales, do you use product sales or total sales?
Share Price Close x # of shares
Earnings per share?
profit/# of shares
Buying and selling capacity
• Buying capacity takes 1 year to deliver (in thousands)
o Costs $6/unit + $4/automation
• Selling capacity happens right away
o Receive 65% of original purchase price (35% discount)
To calculate how much you get back
0.65 x cost
where cost = units x (6 + 4(automation rating))
To increase automation:
cost = units x ($4 x # of increases)
how many shares can be issued each year? (max)
• Can issue up to 20% of outstanding shares/round
What is ideal spot based on?
perceptual map - size and performance
How much awareness does each new product generate?
o New products creates 25% awareness at no cost
Forecasting formula (demand analysis)
Total demand Next Round = Total Industry Demand + (total industry demand*growth rate)
Forecast = total demand next round * market share
Rough and fine cut circles
• Rough Cut Circle – radius = 4 units
• Fine Cut Circle – radius = 2.5 units
equity calculation for Book Value
• Book Value = equity/shares outstanding
Drifting across perceptual map Given Starting performance and size (drift rate for low tech is +0.5 performance and -0.5 size and high tech is +0.7 and - 0.7)
Add to performance 0.5 or 0.7 each year
Subtract from size 0.5 or 0.7 each year
Situation Analysis included
Mission Statement: Premium products for mainstream customers. Our brands will withstand the test of time
Differentiator with product life cycle focus (MAINSTREAM)
without mainstream = broad differentiator
Mission Statement: low-priced products for the industry. Our brands offer solid value.
Broad Cost leader (both segments)
- mention only price, so focus is on cost
Mission Statement: reliable products for low tech customers. Our brands offer value
Niche cost leader (low tech)
- says low tech
Mission statement: premium products for technology orientated customers. Our brands define the cutting edge
Niche Differentiator (high tech)
- says premium and tech orientated customers
Mission statement: reliable products for mainstream customers. Our brands offer value
Cost leader with product lifecycle focus
- mainstream = life cycle focus
Reliable - Cost Leader
Mainstream - life cycle focus
Premium - differentiator
When demand exceeds supply, a seller's market emerges. This means that customers are willing to accept _____ but not willing to accept
WIlling to accept: low scoring products (price and MTBF)
Not willing to accept: if outside Rought cut circle
How much will bank lend?
Bank will lend up to 75% A/R and 50% this year's inventory (works out to be about 15% of combined value of this year's and last year's total DL and DM)
Final step: bankers increase borrowing limit by 20% for room for expansion
cannot exceed lesser of 5% outstanding shares or total equity; charged 1.5% brokerage fee
Issuing stock is there a brokerage fee?
Emergency loan penalty in addition to current debt rate?
Issuing bonds is there a brokerage fee? Lend up to what % of collateral?
lend up to 80% of capacity and equipment
Retiring debt is 1.5%
Increasing MTBF increases what?
material costs, $0.30 for every addition 1000 hours
What happens for every $1 above price range? $10 above price range?
1$ above lose 10% customer survey score
up to $10 = demand is zero
(9.99 is okay)
MTBF 1000 hours below segmend guideline?
Up to 5000 hours from range?
lose 20% of customer survey score
Up to 5000 hours = demand falls to zero
(4999 is okay)