I added two products per the team decision.
I kept the project completion under a year.
For the new products, they are set to complete in Jan of 24- so it’ll take just over a year.
Marketing Decisions (Daria)
|Unit Sales Forecast||Cake3250|
Criteria for Low Tech/Cost Niche:
|Price||$15.00 – $35.00||55%|
|Ideal Position||Speed 5.3, Accuracy 5.3||17%|
|Service Life||14,000 – 20,000 Hours||9%|
Based on the price suggested, the price per product was set to $25.50, which increased the revenue that was the assumption if the forecasted sales are met. Promo budget was set to $1,550 in order to increase enough customer’s awareness, but not too much so that costs aren’t increased. Sales budget is considered to be more important for low cost products because it provides an overall support of the product and builds the accessibility of the product. Therefore, the sales budget was set to $2,300. The forecast was set to $3,250, as the demand this year is $4,126.
Our strategy: Competitive advantage is gained by keeping R&D, production, and raw materials costs to a minimum, enabling the company to compete on the basis of price. Prices are below average. Automation levels are increased to improve margins.
- Order 1700 – based on keeping plant utilization at 100%.
- Plant Utilization – 100%. Keeping plant utilization around 100 % helped move our contribution margins from 7% to 16.1%. The goal is for contribution margins to be around 30% so I made adjustments in order to get that number as high as I could. We also do not have the new products we added yet, therefore we do not need a second shift for production.
- Plant Modifications: – capacity 1700, no modifications needed therefore no added costs. Automation should be high but it’s expensive so I moved it to 3.4. If we shift it slightly each round instead of all at once it should help our contribution margins.
A total of $14,400 was borrowed. The interest rates for both long and short term were incredibly low. The reason for the borrowing was to ensure a good starting closing cash position concurrently with ensuring coverage of operational costs. The money movement is based on the desire to start strong to set a solid foundation to grow from.
Marketing Decisions (Daria)
Had to go back to Product to lower the service life to 17,000 to lower the cost per unit and increase the revenue. The price was increased to $31. Lowered Promo budget to $900, assuming the customer is already aware of the product. Lowered the sales budget to $2,100 to save on costs even more. Lowered forecast to 2,800.
Upped inventory to 2625. This way hopefully we do not sell out, or have too much leftover.
Plant Utilization 154%. Upped the utilization by increasing supply to take advantage of the second shift. Increased capacity of the plant slightly to help with supply and added more automation to lower labor costs. Also spent some money to be able to produce “Crimp” Next round i’ll add on “Cute” I did not have enough money to spend for both at once.
Contribution Margins are closer to the goal of over 30%.
I am supposed to forecast based on sales, and we sold 2,461 units. My forecast was 2,800, changed to 2,500. Other numbers are kept the same. For the second new product, promotion and sales budgets are set to $1,200, and a price is set to 32.50. Sales forecast for the new product is $600.
Kept inventory to 1625.
Plant Utilization is at 138% & Kept the capacity at 1900.
Upped Automation to 4.5
Contribution Margin 35.2%
Set Inventory to 625
Plant Utilization 179% & Capacity at 350
Automation upped to 1.4
Added Production. Plant Capacity 350 and Automation 1
Borrowed $13,600 for the round. The debt from operations for the company was around $11,500. This is due to the cost of operations. To cover the cost and give us some breathing room, this amount was necessary.
Lowered the promo and sales budget for Cake, lowered the promo and sales budget for Crimp, set the sales and promo budgets to 1,200 for Cute with the forecast of 1,200, as it was done for Crimp originally.
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