Capsim Simulation Review Final Exam Already Passed

Capsim Simulation Review Final Exam Already Passed To invent a new product, which simulation inputs must be provided? Name, Size, Performance, MTBF Buyer's Market The best time for consumers to buy; characterized by large supply, small demand, and low prices. Seller's Market The best time for producers to sell; characterized by large demand, small supply, and high prices Which inputs to the simulation affect the December Customer Survey score for a product? Price, performance, size, MTBF, promo budget, sales budget, AR Policy What one factor affects the December customer Survey score, but is not an input? Age How can a person use the Production Report to determine the number of units produced? capacity * plant utilization = production What is the main reason for inventing a new product? Increase your market share; takes market share away from your competitors Why is it good to invent a new product for the high tech segment? The product age starts off at 0, which is ideal Explain "everything you know" about the promo budget A promo budget corresponds to "awareness" and is spent on commercials, coupons, etc.; must continually be funded or customers will forget about the product Awareness the % of people who could know about your product that do know about it Explain "everything you know" about the sales budget Corresponds with "accessibility"; spent on wages of sales people, warehouses, trucks, customer service Accessibility the % of people who could get the product if they wanted it What is the purpose of the perceptual map? -A perceptual map is used to illustrate the position of a firm's products or brands in consumers' minds against the position of competition's products -shows ideal spot - helps guide your positioning choices Formula for plant and equipment Plant & Equipment = 1st shift capacity * ($6 + ($4 * automation)) -$6: Floor space constant -$4: Machine constant If a company has limited production capacity and produces the maximum amount they can, what other input can be changed to benefit from this situation? Increase the price; if you can't produce enough, raise the price to increase profit per unit but decrease demand Ideal production capacity equal to demand Which simulation inputs affect the cost of materials? MTBF, Size, Performance Ending inventory equation Beginning Inventory + Production - Sales = Ending Inventory Why do companies pay dividends? To distribute funds to shareholders; what companies do once they have excess cash and don't have other ideas What factors limit the amount a company should pay in dividends? Never pay a dividend than EPS Don't pay more dividends than the cash you have (i.e. don't borrow to pay dividends) Which inputs to the simulation COULD affect the contribution margin of a product? Price, MTBF, Size, Performance, Automation, Capacity / Production Schedule Contribution Margin Price - Raw Materials - Labor Trade off when increasing the number of days of sales in accounts receivable + Increase in Sales - Cash goes down (because giving a longer time to pay) Trade off when increasing the number of days of cost of goods sold in accounts payable + Get to hold onto cash longer - Suppliers hold your raw materials What is the negative effect of issuing more debt? Interest payment lowers profit Interest rate goes up to compensate for increased risk you won't pay back What is the negative effect of issuing more stock? Stock price goes down; EPS decreases EPS equation Net Income / # of Shares Outstanding