Decision Guidelines Follow the decision guidelines below unless directed otherwise by your professor.
We will price and market Adam during the year we begin production Sales forecasts are purposely conservative. They reflect a pessimistic point of view. That is, have enough inventory on hand to meet demand for 6 weeks beyond the sales forecast. For example, your Marketing forecasts demand atand you have 87 units already on hand in the warehouse.
Since you have 87 on hand, you would schedule units for production of Able product. Since your Marketing forecast was conservative, it is unlikely that you will sell less than your forecast, but there is a good chance that you will stock out.
Capstone does not take backorders.
If you cannot meet demand, sales go to competitors. Therefore, you want to plan for the upside as well as the downside. Your Proforma Balance Sheet will forecast about 6 weeks of inventory. You hope that your actual sales will fall between your sales forecast and your inventory levels.
For your new product Adam, you need to purchase a factory in next year in order to schedule production in There is a one year lag between purchase and use of new production capabilities for both new and existing products.
Inventories are paid for when you build the product. Too much unexpected inventory leads to zero cash with bills still outstanding. At that moment, Big Al arrives with a smile, pays your bills, and leaves you with a loan and a stiff interest payment. In the United Statesthis event is also known as Chapter 11 bankruptcy.
Here are some guidelines to help you avoid Big Al. Your proforma Balance Sheet predicts your financial condition at the end of this year.
Make conservative marketing forecasts. Override it with a forecast of your own. If you are conservative, it is unlikely that your worst expectations will be exceeded.
Next, build additional inventory beyond your pessimistic expectations. This forces your proforma Balance Sheet to predict a future where your conservative sales forecast comes true and you are left with inventory. Drive your Cash position until it roughly equals your Inventory position. That is, either issue stock or borrow bonds until Cash equals Inventory.
This creates an additional reserve for those times when your worst expectations are exceeded and disaster strikes. Working capital can be thought of as the money that you need to operate day-to-day. The better your marketing forecasts, the less working capital you will require.
If you do not have sufficient new bond debt capacity, issue stock to cover the shortfall.View Ei Phyoe Kywe’s full profile. It's free! $1M investment portfolio analysis with A+. Andrew’s Business Strategies at CAPSIM Simulation Game. (EID) Team-based Project. May Industry: Oil & Energy. Vertical integration is a strategy where a firm acquires business operations within the same production vertical, which can be forward or backward in nature.
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This lesson is a brief synopsis of section Finance on page 15 of the Capstone team member guide. a team with people based in different locations. Eighty percent (80%) of respondents indicated that they were, but 20% of them did not.
Sixty‐four percent (64%) of respondents considered their team to be an example of a virtual team. Essays - largest database of quality sample essays and research papers on Team Andrew Capsim Analysis.