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Week One Worksheet Assignment-6

The document provides guidance for a capstone team on various aspects of running a sensor company, including: 1. The functions of key departments like R&D, Marketing, Production, and Finance. 2. Factors to consider for tasks like sales forecasting, production forecasting, and setting product prices. 3. Metrics that impact demand and customer preferences, such as reliability scores, age, and price. 4. Financial information such as sources of funding, loan terms, and what financial statements indicate. 5. Tools to use like the perceptual map for tracking customer preferences and the industry report for strategy insights.

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Greg Kaschuski
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113 views3 pages

Week One Worksheet Assignment-6

The document provides guidance for a capstone team on various aspects of running a sensor company, including: 1. The functions of key departments like R&D, Marketing, Production, and Finance. 2. Factors to consider for tasks like sales forecasting, production forecasting, and setting product prices. 3. Metrics that impact demand and customer preferences, such as reliability scores, age, and price. 4. Financial information such as sources of funding, loan terms, and what financial statements indicate. 5. Tools to use like the perceptual map for tracking customer preferences and the industry report for strategy insights.

Uploaded by

Greg Kaschuski
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Week One Worksheet Assignment

From Capstone Team Member Guide

Each Student is to complete these questions after reading the Team member Guide and then
submit their answers.

1. What information does the Courier provide?


The Courier is a information rich year end report on the sensor industry. It has
information on customer buying patterns, product positioning, public financial records,
and other information that can be leveraged to make decisions.
2. Research and Development
a. What is Research and Development’s function? R&D designs the product line. It is
responsible for inventing and revising products that appeal to customers.
b. What information and expenses must be provided or accounted for to create a new
product? Expenses that need to be accounted for would be costs of materials, facilities
acquisitions, and automation levels. R&D takes into account age of existing products,
customer demographics, and reliability of current products
3. Marketing
a. Promotional budgets have what affect? They affect customer awareness of a
company’s products
b. Sales budgets have what affect? They affect customer accessibility
c. What factors should a team consider to create a sales forecast? A product’s
positioning, age, MTBF, and sales price
4. Production
a. What factors should a team consider to create a production forecast? Should factor in
the sales forecast, and the inventory, as well as capability/capacity, and cost of
production
b. How can current capacity be doubled? Cost to Double Capacity = First Shift
Capacity x [$6 + ($4 x Automation Level)]
c. Which shift is most economical to run? 1st Why? 2nd shift wages are 50% higher
than 1st shift
d. How does plant utilization affect costs? Unutilized capacity can result in unnecessary
costs. It feeds into the IBP as well.
e. How does automation affect product costs? Automation costs money to implement
but it can also decrease costs fed into paying workers
f. How long does it take to add capacity or automation? Both take a full year to take
effect
5. Finance
a. What methods may the company use to finance its operations?

• Current Debt
• Stock Issues
• Bond Issues (Long Term Debt)

• Profits
b. What other financial activities may the company use?
Adjusting dividend policies, accounts payable policies, adjusting the capital and debt
structure, monitoring performance/KPIs and making adjustments based on those.
c. How much does Big Al (the loan shark) charge? You pay one year’s worth of current
debt interest on the loan and Big Al adds a 7.5% penalty fee on top to make it worth his
while
6. What is the function of the finance department? The function of finance department is to
manage financial risk, determine debt levels, and write checks. They monitor the flow of
money.
7. Where could one find the breakdown for each segment’s buying criteria in order of
importance? What does this mean for product strategy and tactics? Industry Conditions
report, you can use this report to draw important conclusions about strategy and what
decisions to make regarding what direction to take.
8. Why are Customer Survey Scores important? A product with a higher score will
outperform a product with a lower score
9. What is the significance of the ideal spot? The ideal spot is that point in the heart of the
segment where, all other things being equal, demand is highest.
10. Pricing
a. Prices are expected to drop by how much each year? Decrease by 0.50$ per year
b. As price goes down, price score goes up.
11. Mean Time Before Failure (MTBF)
a. What is the cost to be below acceptable MTBF scores? Demand for the product falls,
and below 5000 below the target MTBF causes demand to fall to zero.
b. What is the cost to improve MTBF scores? 0.30$ for every 1000 hours of reliability
added
c. What is the cost to be above the segment’s MTBF requirements? Customer survey
score increases inside the segment range but once outside the segment range (above),
the benefit is negligible and the added cost is just an added cost with little to no return
on investment.
12. Age
a. What type of customer prefers newer products? Customers that demand cutting edge
technologies
b. Where can one find the age preferences for each segment? Industry Conditions
Report
13. Operations
a. Capacity can be sold for what dollar value of the original investment? 0.65$ on the
dollar of investment
b. What steps are available for a firm to discontinue a sensor?

If you sell all the capacity on an assembly line, Capstone interprets this as a liquidation instruction and will
sell your remaining inventory for half the average cost of production. Capstone writes off the loss on your
income statement. If you want to sell your inventory at full price, sell all but one unit of capacity.
14. Marketing
a. What is the effect of dropping the price of sensors? It can improve customer demand,
customer survey score, and improve IBP
b. Sales forecasting is imperfect, what are two critical issues? Manufacturing too many
products results in inventory carry costs, while. Manufacturing too few results in lost
opportunity of sales.
15. Automation
a. Increasing a line’s automation reduces labor costs by approximately how much?
Current Capacity # * 4 * 2
b. Two issues with automation are?
R & D becomes more difficult, and automation is very expensive
16. Finance
a. Long term assets should be financed with? Bonds
b. What happens if the team fails to plan for poor financial performance? You are given
a harsh loan from Big Al
17. The Capstone Courier
a. Why look at the Segment Analysis? To look at customer positioning relative to the
ideal position in terms of age, reliability, and price.
b. Why look at the Accessibility, Market Share and Top Products Segments?
This shows how easily customers can interact with the company. It also shows what
potential the company has to capitalize on
c. What does the cash flow statement indicate? The cash flow statement shows the cash
flowing through the organization. It also shows the change in cash from previous
year.
d. Where is the net margin for products indicated at? Income Statement
18. The Perceptual Map can be used for? It is used to track position of product to customer
preferences
19. Forecasting
a. REMEMBER: There is no such a thing as a PERFECT Forecast or Pro Forma Report
– these are merely estimates. True
b. How will an unusually high forecast affect your Proformas? It will predict unrealistic
cash flow in the proforma
c. What does the simulation charge for inventory carrying cost? 12% Carrying Cost
20. Emergency Loans
a. What are the two main causes for receiving an emergency loan? Emergency loans are
often encountered when last year’s sales forecasts were higher than actual sales or when the
Finance Department failed to raise funds needed for expenditures like capacity and automation
purchases.

c. What happens to your stock price if you receive an emergency loan?


Stock price will fall because investors do not look kindly toward liquidity shortages

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