13.4 Broad Differentiator - Practice Round 2

Practice Round 2

R & D Round 2

Daze - Improve positioning and reduce age. Example: Increase Daze's performance to 7.0, reduce size by 13.0.

First New Product - Note that the new product's row is yellow instead of green, and that you cannot change these cells. This is because your product will not emerge from R&D until its current project completes. Under the rules of the simulation, new R&D projects cannot begin until the old one completes.

Second New Product - Launch a second new product places in both the Low Tech and, with a project length less than 2 years (no later than December of next year). Example: Name: Dude (replace the first NA in the list), performance 9.1, size 10.9 and a reliability (MTBF) 21000.

Important: Make certain the Daze project completes during this year, before December 31st. Under the rules, a new project can only begin on January 1st. If a project does not complete before the end of this year, you cannot begin follow-up project next year.

Marketing Round 2

Daze - Hold price, promotion and sales budgets at current levels. Forecast unit sales near last year's level. Example: Price $34.75, promotion budget $1150, sales budget $1150, and sales forecast 1200.

First New Product - Enter promotion and sales budgets of $1150, and a price of $35.00. The product will not be released by R&D until after the first of the year, therefore enter a sales forecast of 500.

Second New Product - Marketing decisions will be made next year when the product is ready to begin production.

Production Round 2

Schedule production using the formula:

(Unit Sales Forecast X 1.15) - Inventory On Hand

Important: As your new product is coming out sometime during the year, you might not be able to use the above formula - new products cannot begin production prior to their revision (release) date. Should the number you enter into the production schedule turn red, reduce the schedule until the red number turns black.

First New Product - Increase automation to 3.0.

Second New Product - Buy 500,000 units of capacity by entering 500 in the Buy Sell Capacity cell. Set an automation level of 2.0.

Finance Round 2

Match your plant investment with a stock issue. If you cannot raise adequate capital to match the investment, issue bonds to cover the shortfall.

Look at the proforma balance sheet, and add together your cash and inventory accounts. Apply the following rule of thumb. Keep between 15% and 20% of your balance sheet assets in cash plus inventory. You do not care about the mix, but you do want to have adequate reserves to cover unexpected swings in inventory.

Adjust your cash position to meet the above guidelines. If you are cash poor, issue additional stock or additional bonds. If you are cash rich, pay dividends.

Save decisions (select "directly to the website").