Capsim Answers From Practice b b b
b
Questions b
Americas - correct answer- 2:1 (Budget: Performance) for foreseeable future
b bb b b b b b b b
Europe - correct answer- 3:1 but trending towards performance in the next five to ten
b bb b b b b b b b b b b b b
years.
b b
-High-income region b
-experiencing steady economic growth that your company hopes to capitalize on. b b b b b b b b b b
Asia Pacific - correct answer- -3:1 with further expansion of the budget market
b b bb b b b b b b b b b
anticipated.
b b
-low-income communities, significant demand for improved health care. b b b b b b b b
-zero-tariff policy that makes it an attractive market moving forward.
b b b b b b b b b
R&D Department - correct answer- Responsible for creating new products AND
b b bb b b b b b b b
managing existing offerings.
b b b b
-Success depends on your ability to understand customer needs and communicate with
b b b b b b b b b b b
other departments.
b b
-must work closely with the *Marketing* department because they provide info on what
b b b b b b b b b b b b
your customers really want so that R&D can identify the best product specifications to
b b b b b b b b b b b b b b
meet those needs, while coordinating project timelines and managing development
b b b b b b b b b b
costs.
b
R&D Department - provides information on... - correct answer- -products
b b b b b b bb b b
-customers
-competitors
-cost of your decisions
b b b
R&D Department - 4 product specifications - correct answer- 1) speed
b b b b b b bb b b b
2) accuracy
b b
3) service life
b b b
4) age
b
(price is determined by Marketing)
b b b b
For existing products, adjusting accuracy or speed will cut the age of your product in half.
b b b b b b b b b b b b b b b
The update causes customers to see that it is newer.
b b b b b b b b b b
,By reducing a product's Service Life... - correct answer- your product will have a lower
b b b b b b bb b b b b b b b
material cost. Since Budget customers don't place a heavy demand on Service Life, it
b b b b b b b b b b b b b b
may be wise to reduce that figure.
b b b b b b b
-each 1,000 hours of Service Life adds $0.30 to the material cost. Customer prefer
b b b b b b b b b b b b b
products towards the top of the range.
b b b b b b b
Region Kits - correct answer- -boost demand in an area by 10% compared to the
b b bb b b b b b b b b b b b
competition, but add 3 months of development time to add/remove and 15% in material
b b b b b b b b b b b b b b
cost per unit.
b b b b
-In the case that all six companies offer kits to a specific region, there will be no advantage
b b b b b b b b b b b b b b b b b
in customer demand for any team.
b b b b b b
Age - correct answer- modified products cuts age in half
b bb b b b b b b b
-only decisions changed for Speed or Accuracy cut the age in half. Changes to Service
b b b b b b b b b b b b b b
Life and Region kits have no impact on the perceived age.
b b b b b b b b b b b
Customers in EACH market segment continuously expect... - correct answer- faster andb b b b b b b bb b b b
more accurate products.
b b b
-Each company must innovate and update products!!
b b b b b b
Budget Customer? - correct answer- -considers *price* and *age* above positioning
b b bb b b b b b b b
Marketing Department - correct answer- Responsible for forecasting sales, promoting
b b bb b b b b b b
both the products and brand, as well as pricing and selling your products.
b b b b b b b b b b b b b b
-The Production Department uses these forecasts to determine how much of each
b b b b b b b b b b b
product line to manufacture, and your Finance Department uses these forecasts to
b b b b b b b b b b b b
generate your proforma financial statements.
b b b b b
Marketing Department Decisions: - correct answer- 1) *Setting the price* - for each
b b b bb b b b b b b b b
product in each region, marketing must determine the appropriate balance between
b b b b b b b b b b b
customer price expectations and your company's margins.
b b b b b b b
*currency exchange rates change each year AND are different from region to region.
b b b b b b b b b b b b b
2) *Sales Forecasting* - very important. Accurately forecasting your product's sales will
b b b b b b b b b b b
have a direct impact on your bottom line.
b b b b b b b b b
-must submit a *Best Case* and *Worst Case* forecast for each product in each region.
b b b b b b b b b b b b b b b
-forecast how well *customers* will embrace your products b b b b b b b
-forecast how your products compare with *competition*. b b b b b b
Marketing Department Decisions (cont) : - correct answer- 3) *Awareness and b b b b b bb b b b b
Accessibility* - in charge of promo and sales budgets. How much you spend on your
b b b b b b b b b b b b b b b
promo budget directly affects your customer's awareness of your product. The amount
b b b b b b b b b b b b
you spend on your sales budget is reflected in how accessible your product is to your
b b b b b b b b b b b b b b b b
customers.
b b
2 ways to invest in this - *Product* and *Regional*
b b b b b b b b b b
-In the products panel you can invest in *Promotion*, which impacts Awareness, and in
b b b b b b b b b b b b b
*Sales*, which impacts Accessibility.
b b b b b
4) *Customer Needs* - Customers in budget and performance sections have different
b b b b b b b b b b b
expectations as do customers from region to region. Each product will have a customer
b b b b b b b b b b b b b b
, satisfaction score (the higher the score, the more likely the customer is to purchase the
b b b b b b b b b b b b b b b
product).
b
Promotion - correct answer- Product Promotion makes up 70% of your total Awareness,
b bb b b b b b b b b b b
while Regional Promotion makes up the remaining 30%.
b b b b b b b b b
-Each year, your Awareness and Accessibility will reduce by 1/3 from the prior year.
b b b b b b b b b b b b b
Sales Budgets - correct answer- -how much you spend on distribution systems and your
b b bb b b b b b b b b b b
sales force by product and by region.
b b b b b b b b
-Sales budgets impact Accessibility b b b
Forecasts: Worst Case vs Worst Case - correct answer- -used by the Finance b b b b b b bb b b b b b
department to predict profits, variable costs and contribution margin.
b b b b b b b b b b
-used by Production to determine how many units to produce.
b b b b b b b b b
Inaccurate forecasts --> - correct answer- can result in having too much or too little
b b b bb b b b b b b b b b b
inventory, or not achieving the sales necessary to fund investments.
b b b b b b b b b b
Gross Revenues - correct answer- Worst Case forecast x Price
b b bb b b b b b b
Variable Costs - correct answer- -The sum of material, labor, shipping and inventory
b b bb b b b b b b b b b
carry costs multiplied by Unit Sales.
b b b b b b b
Material and Labor costs are found on the production page.
b b b b b b b b b
Forecast Contribution Margin - correct answer- -Gross Revenue Forecast less variable
b b b bb b b b b b b
costs.
b
Production Department - correct answer- -Responsible for manufacturing enough b b bb b b b b b
products to meet customer demand.
b b b b b
-determines capacity and automation. b b b b
-*Forecasted Demand* is automatically populated with the Best Case forecast set by b b b b b b b b b b b
marketing. To fulfill the forcasted demand, enter the number of units you want your plant
b b b b b b b b b b b b b b b
to produce in the "Production" box (different for each region).
b b b b b b b b b b
In order to ship products abroad, - correct answer- you must have enough capacity to
b b b b b b bb b b b b b b b
make enough products to fill demand.
b b b b b b
-If you don't have enough capacity, you can purchase more or you can outsource to build
b b b b b b b b b b b b b b b
the remaining units (outsourcing uses automation level of 2.0 that cannot be changed).
b b b b b b b b b b b b b
The Forecast Demand is... - correct answer- the Best Case sales forecast you entered
b b b b bb b b b b b b b b
on the Marketing Screen.
b b b b
Capacity - correct answer- -how many units the plant is capable of producing before
b bb b b b b b b b b b b b
outsourcing.
b b
-can be distributed across products or allocated to a few and the rest being outsourced.
b b b b b b b b b b b b b b
-the cost of additional capacity depends on the current automation level on your line.
b b b b b b b b b b b b b
b
Questions b
Americas - correct answer- 2:1 (Budget: Performance) for foreseeable future
b bb b b b b b b b
Europe - correct answer- 3:1 but trending towards performance in the next five to ten
b bb b b b b b b b b b b b b
years.
b b
-High-income region b
-experiencing steady economic growth that your company hopes to capitalize on. b b b b b b b b b b
Asia Pacific - correct answer- -3:1 with further expansion of the budget market
b b bb b b b b b b b b b
anticipated.
b b
-low-income communities, significant demand for improved health care. b b b b b b b b
-zero-tariff policy that makes it an attractive market moving forward.
b b b b b b b b b
R&D Department - correct answer- Responsible for creating new products AND
b b bb b b b b b b b
managing existing offerings.
b b b b
-Success depends on your ability to understand customer needs and communicate with
b b b b b b b b b b b
other departments.
b b
-must work closely with the *Marketing* department because they provide info on what
b b b b b b b b b b b b
your customers really want so that R&D can identify the best product specifications to
b b b b b b b b b b b b b b
meet those needs, while coordinating project timelines and managing development
b b b b b b b b b b
costs.
b
R&D Department - provides information on... - correct answer- -products
b b b b b b bb b b
-customers
-competitors
-cost of your decisions
b b b
R&D Department - 4 product specifications - correct answer- 1) speed
b b b b b b bb b b b
2) accuracy
b b
3) service life
b b b
4) age
b
(price is determined by Marketing)
b b b b
For existing products, adjusting accuracy or speed will cut the age of your product in half.
b b b b b b b b b b b b b b b
The update causes customers to see that it is newer.
b b b b b b b b b b
,By reducing a product's Service Life... - correct answer- your product will have a lower
b b b b b b bb b b b b b b b
material cost. Since Budget customers don't place a heavy demand on Service Life, it
b b b b b b b b b b b b b b
may be wise to reduce that figure.
b b b b b b b
-each 1,000 hours of Service Life adds $0.30 to the material cost. Customer prefer
b b b b b b b b b b b b b
products towards the top of the range.
b b b b b b b
Region Kits - correct answer- -boost demand in an area by 10% compared to the
b b bb b b b b b b b b b b b
competition, but add 3 months of development time to add/remove and 15% in material
b b b b b b b b b b b b b b
cost per unit.
b b b b
-In the case that all six companies offer kits to a specific region, there will be no advantage
b b b b b b b b b b b b b b b b b
in customer demand for any team.
b b b b b b
Age - correct answer- modified products cuts age in half
b bb b b b b b b b
-only decisions changed for Speed or Accuracy cut the age in half. Changes to Service
b b b b b b b b b b b b b b
Life and Region kits have no impact on the perceived age.
b b b b b b b b b b b
Customers in EACH market segment continuously expect... - correct answer- faster andb b b b b b b bb b b b
more accurate products.
b b b
-Each company must innovate and update products!!
b b b b b b
Budget Customer? - correct answer- -considers *price* and *age* above positioning
b b bb b b b b b b b
Marketing Department - correct answer- Responsible for forecasting sales, promoting
b b bb b b b b b b
both the products and brand, as well as pricing and selling your products.
b b b b b b b b b b b b b b
-The Production Department uses these forecasts to determine how much of each
b b b b b b b b b b b
product line to manufacture, and your Finance Department uses these forecasts to
b b b b b b b b b b b b
generate your proforma financial statements.
b b b b b
Marketing Department Decisions: - correct answer- 1) *Setting the price* - for each
b b b bb b b b b b b b b
product in each region, marketing must determine the appropriate balance between
b b b b b b b b b b b
customer price expectations and your company's margins.
b b b b b b b
*currency exchange rates change each year AND are different from region to region.
b b b b b b b b b b b b b
2) *Sales Forecasting* - very important. Accurately forecasting your product's sales will
b b b b b b b b b b b
have a direct impact on your bottom line.
b b b b b b b b b
-must submit a *Best Case* and *Worst Case* forecast for each product in each region.
b b b b b b b b b b b b b b b
-forecast how well *customers* will embrace your products b b b b b b b
-forecast how your products compare with *competition*. b b b b b b
Marketing Department Decisions (cont) : - correct answer- 3) *Awareness and b b b b b bb b b b b
Accessibility* - in charge of promo and sales budgets. How much you spend on your
b b b b b b b b b b b b b b b
promo budget directly affects your customer's awareness of your product. The amount
b b b b b b b b b b b b
you spend on your sales budget is reflected in how accessible your product is to your
b b b b b b b b b b b b b b b b
customers.
b b
2 ways to invest in this - *Product* and *Regional*
b b b b b b b b b b
-In the products panel you can invest in *Promotion*, which impacts Awareness, and in
b b b b b b b b b b b b b
*Sales*, which impacts Accessibility.
b b b b b
4) *Customer Needs* - Customers in budget and performance sections have different
b b b b b b b b b b b
expectations as do customers from region to region. Each product will have a customer
b b b b b b b b b b b b b b
, satisfaction score (the higher the score, the more likely the customer is to purchase the
b b b b b b b b b b b b b b b
product).
b
Promotion - correct answer- Product Promotion makes up 70% of your total Awareness,
b bb b b b b b b b b b b
while Regional Promotion makes up the remaining 30%.
b b b b b b b b b
-Each year, your Awareness and Accessibility will reduce by 1/3 from the prior year.
b b b b b b b b b b b b b
Sales Budgets - correct answer- -how much you spend on distribution systems and your
b b bb b b b b b b b b b b
sales force by product and by region.
b b b b b b b b
-Sales budgets impact Accessibility b b b
Forecasts: Worst Case vs Worst Case - correct answer- -used by the Finance b b b b b b bb b b b b b
department to predict profits, variable costs and contribution margin.
b b b b b b b b b b
-used by Production to determine how many units to produce.
b b b b b b b b b
Inaccurate forecasts --> - correct answer- can result in having too much or too little
b b b bb b b b b b b b b b b
inventory, or not achieving the sales necessary to fund investments.
b b b b b b b b b b
Gross Revenues - correct answer- Worst Case forecast x Price
b b bb b b b b b b
Variable Costs - correct answer- -The sum of material, labor, shipping and inventory
b b bb b b b b b b b b b
carry costs multiplied by Unit Sales.
b b b b b b b
Material and Labor costs are found on the production page.
b b b b b b b b b
Forecast Contribution Margin - correct answer- -Gross Revenue Forecast less variable
b b b bb b b b b b b
costs.
b
Production Department - correct answer- -Responsible for manufacturing enough b b bb b b b b b
products to meet customer demand.
b b b b b
-determines capacity and automation. b b b b
-*Forecasted Demand* is automatically populated with the Best Case forecast set by b b b b b b b b b b b
marketing. To fulfill the forcasted demand, enter the number of units you want your plant
b b b b b b b b b b b b b b b
to produce in the "Production" box (different for each region).
b b b b b b b b b b
In order to ship products abroad, - correct answer- you must have enough capacity to
b b b b b b bb b b b b b b b
make enough products to fill demand.
b b b b b b
-If you don't have enough capacity, you can purchase more or you can outsource to build
b b b b b b b b b b b b b b b
the remaining units (outsourcing uses automation level of 2.0 that cannot be changed).
b b b b b b b b b b b b b
The Forecast Demand is... - correct answer- the Best Case sales forecast you entered
b b b b bb b b b b b b b b
on the Marketing Screen.
b b b b
Capacity - correct answer- -how many units the plant is capable of producing before
b bb b b b b b b b b b b b
outsourcing.
b b
-can be distributed across products or allocated to a few and the rest being outsourced.
b b b b b b b b b b b b b b
-the cost of additional capacity depends on the current automation level on your line.
b b b b b b b b b b b b b
