CAPSIM Questions with correct Answers

CAPSIM Questions with correct Answers Americas 2:1 (Budget: Performance) for foreseeable future Europe 3:1 but trending towards performance in the next five to ten years. -High-income region -experiencing steady economic growth that your company hopes to capitalize on. Asia Pacific -3:1 with further expansion of the budget market anticipated. -low-income communities, significant demand for improved health care. -zero-tariff policy that makes it an attractive market moving forward. R&D Department Responsible for creating new products AND managing existing offerings. -Success depends on your ability to understand customer needs and communicate with other departments. -must work closely with the Marketing department because they provide info on what your customers really want so that R&D can identify the best product specifications to meet those needs, while coordinating project timelines and managing development costs. R&D Department - provides information on... -products -customers -competitors -cost of your decisions R&D Department - 4 product specifications 1) speed 2) accuracy 3) service life 4) age (price is determined by Marketing) For existing products, adjusting accuracy or speed will cut the age of your product in half. The update causes customers to see that it is newer. By reducing a product's Service Life... your product will have a lower material cost. Since Budget customers don't place a heavy demand on Service Life, it may be wise to reduce that figure. -each 1,000 hours of Service Life adds $0.30 to the material cost. Customer prefer products towards the top of the range. Region Kits -boost demand in an area by 10% compared to the competition, but add 3 months of development time to add/remove and 15% in material cost per unit. -In the case that all six companies offer kits to a specific region, there will be no advantage in customer demand for any team. Age modified products cuts age in half -only decisions changed for Speed or Accuracy cut the age in half. Changes to Service Life and Region kits have no impact on the perceived age. Customers in EACH market segment continuously expect... faster and more accurate products. -Each company must innovate and update products!! Budget Customer? -considers price and age above positioning Marketing Department Responsible for forecasting sales, promoting both the products and brand, as well as pricing and selling your products. -The Production Department uses these forecasts to determine how much of each product line to manufacture, and your Finance Department uses these forecasts to generate your proforma financial statements. Marketing Department Decisions: 1) Setting the price - for each product in each region, marketing must determine the appropriate balance between customer price expectations and your company's margins. *currency exchange rates change each year AND are different from region to region. 2) Sales Forecasting - very important. Accurately forecasting your product's sales will have a direct impact on your bottom line. -must submit a Best Case and Worst Case forecast for each product in each region. -forecast how well customers will embrace your products -forecast how your products compare with competition. Marketing Department Decisions (cont) : 3) Awareness and Accessibility - in charge of promo and sales budgets. How much you spend on your promo budget directly affects your customer's awareness of your product. The amount you spend on your sales budget is reflected in how accessible your product is to your customers. 2 ways to invest in this - Product and Regional -In the products panel you can invest in Promotion, which impacts Awareness, and in Sales, which impacts Accessibility. 4) Customer Needs - Customers in budget and performance sections have different expectations as do customers from region to region. Each product will have a customer satisfaction score (the higher the score, the more likely the customer is to purchase the product). Promotion Product Promotion makes up 70% of your total Awareness, while Regional Promotion makes up the remaining 30%. -Each year, your Awareness and Accessibility will reduce by 1/3 from the prior year. Sales Budgets -how much you spend on distribution systems and your sales force by product and by region. -Sales budgets impact Accessibility Forecasts: Worst Case vs Worst Case -used by the Finance department to predict profits, variable costs and contribution margin. -used by Production to determine how many units to produce. Inaccurate forecasts -- can result in having too much or too little inventory, or not achieving the sales necessary to fund investments. Gross Revenues Worst Case forecast x Price Variable Costs -The sum of material, labor, shipping and inventory carry costs multiplied by Unit Sales. Material and Labor costs are found on the production page. Forecast Contribution Margin -Gross Revenue Forecast less variable costs. Production Department -Responsible for manufacturing enough products to meet customer demand. -determines capacity and automation. -Forecasted Demand is automatically populated with the Best Case forecast set by marketing. To fulfill the forcasted demand, enter the number of units you want your plant to produce in the "Production" box (different for each region). In order to ship products abroad, you must have enough capacity to make enough products to fill demand. -If you don't have enough capacity, you can purchase more or you can outsource to build the remaining units (outsourcing uses automation level of 2.0 that cannot be changed). The Forecast Demand is... the Best Case sales forecast you entered on the Marketing Screen. Capacity -how many units the plant is capable of producing before outsourcing. -can be distributed across products or allocated to a few and the rest being outsourced. -the cost of additional capacity depends on the current automation level on your line. Automation -While automation optimizes your plant's performance and lowers labor costs, it also adversely affects your ability to create and modify products in the R&D department. -For each automation you add, it becomes increasingly difficult to re-position your products -a project that moves a product 1.0 on the map takes significantly longer at an automation level of 8.0 than at 5.0. Large moves on the perceptual map will be less affected by a higher automation level (it takes more years with a higher automation). Shipping per unit Europe = $3.00 per unit Asia = $2.50 per unit **Only Europe has a tariff per unit. Fulfillment After Adjustment = Your production order is adjusted by your Accounts Payable policy, and added to your Outsourcing order. -Adding existing inventory to your fulfillment after adjustment gives you the total units produced for the current year. Accounts Payable In Production and Finance, you can adjust your A/P policy, which is the lag between when you receive materials from your suppliers and your payment date. -Default is 30 days, but you can adjust between 0 and 150 days. -The longer you make your suppliers wait for payment, the fewer materials you receive, which results in fewer units being produced. When attempting to fulfill Forecasted Demand, there are a number of variables to consider: 1) Do you have existing inventory remaining from previous rounds? 2) How many units are actually being produced? Look at "Fulfillment after adjustment" - calculates the number of units you will produce after adjusting from the impact of your accounts payable policy. 3) Does your plant have the production capacity to produce the number of units the market demands? Here it is important to consider the option outsourcing production. "Remaining Outsource" = your current capacity, the number of units you can produce by outsourcing. Enter in "Outsource". Keep in mind that the outsource production plant has a fixed automation rating of 2 that will not change. You can enter higher numbers in "Automation". A higher automation rating means lower labor costs, which added to your products material and shipping costs give you your total cost per unit (under "Cost Breakdown"). Contribution Margin represents how much the product generates when you factor in how much it costs to produce and ship. 37% means you'll make 37 cents on each dollar from sales of that product. Finance Department concerned with 5 issues: 1) Acquiring capital you need to expand your assets 2) establishing a dividend policy to maximize the return to shareholders. 3) setting A/P policy and A/R policy 4) driving relationship between debt and equity 5) Selecting and monitoring performance measures that support your strategy. -Decisions should be made after all other departments have entered their decisions. After all decisions, the finance department determines where and how to find the funds. Finance Department -Responsible for making sure your company has the funds needed to operate. -Though much of your money will come from sales of your products, you will also have the option to borrow current debt, issue stock, issue bonds/long term debt. These finance decisions will be essential for funding the investments and operational costs of the other 3 departments. -"Accounts Policy" to adjust your accounts payable and accounts receivable (the number of days between transactions and payments). Accounts Receivable - affects "customer satisfaction score" Accounts Payable - affects production's "fulfillment after adjustment"