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EvTel Cannibalization Lab (Completed)

The document discusses the sales performance and cannibalization effects of new products introduced by the University of Papua New Guinea Store and EvTel. UPNG Store's Polo T-shirt sales decreased from 400 to 300 units due to the introduction of the Basic T-shirt, with a maximum cannibalization point calculated at 107.61 units. EvTel is analyzing the impact of introducing SkySound products on the SkyBox Refrigerator's sales and gross margin, considering various cannibalization scenarios and fixed costs.

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8 views6 pages

EvTel Cannibalization Lab (Completed)

The document discusses the sales performance and cannibalization effects of new products introduced by the University of Papua New Guinea Store and EvTel. UPNG Store's Polo T-shirt sales decreased from 400 to 300 units due to the introduction of the Basic T-shirt, with a maximum cannibalization point calculated at 107.61 units. EvTel is analyzing the impact of introducing SkySound products on the SkyBox Refrigerator's sales and gross margin, considering various cannibalization scenarios and fixed costs.

Uploaded by

peachypaimon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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University of Papua New Guinea Store needs your help!

Assume that UPNG Store is selling Polo T-shirt an average of 400 units per
semester. In second semester, they have introduced their new product, Basic T-
shirt and sold an average of 150 units. It also has a negative effect on their first
product. They just sold 300 units Polo T-shirt in the second semester. What is
the maximum amount of sales UPNG can lose from their orginal product to the
new product without a change in their profit? Current Cannibalization

Fall Spring
Goods Price Prod. Cost Contribution Margin Aver. Units Sold Aver. Units Sold
Polo T-shirt 30.00 17.00 13.00 400.00 300.00 5,200.00
New Basic T-shirt 23.33 14.00 9.33 - 150.00

Total Profit 5200 5298.903459

Max. Cannibalization Point 107.61

*Ignore all other costs except those given in the table. 5200
100.00
Assume that EvTel decided to see what would happen if they chose to introduce SkySound product with low and high options, which consists of spe
additional machinery leasing cost for SkySound: Low and High options is 750,000.00 TL per year. The current Manufacturing Fixed Cost for S

SkyBox Refrigerator & SkySound: Low Option Cannibalization Case

Suppose that the business has decided to introduce only SkySound: Low on top of the existing SkyBox Refrigerator product. What is the maximum amou
SkyBox Refrigerator that the company can bare to lose without decreasing its profit? (Don't forget to apply the change in manufacturing fixed cost.) With
making any calculations, what can you say about the new gross margin of the business after introduction of SkySound: Low assuming it has caused a curr
cannibalization of 11,000 on the old product? (Compare the gross margin of the business when it sells only SkyBox Refrigerator and SkyBox Refrigerator &
SkySound: Low in the following year. Don't forget to consider the current cannibalization occured on SkyBox Refrigerator due to SkySound: Low.)

Goods Price Production Cost Contribution Margin 2022 Sales


SkyBox Refrigerator 1,675.00 609.94 1,065.06 160,000.00
SkyBox Refrigerator & SkySound: Low Option 1,799.00 809.16 989.84 -

Gross Margin 166,136,136.00

Maximum Cannibalization Point


and high options, which consists of speakers included in the SkyBox refrigerator. The
current Manufacturing Fixed Cost for SkyBox Refrigerator is 4,273,000.00 TL.

or product. What is the maximum amount of


hange in manufacturing fixed cost.) Without
ound: Low assuming it has caused a current
x Refrigerator and SkyBox Refrigerator &
igerator due to SkySound: Low.)

2023 Sales Current Cannibalization 11,000.00


149,000.00
25,000.00 Cannibalization Effect 11,715,628.10

178,416,498.40

22,530.24
Assume that EvTel decided to see what would happen if they chose to introduce SkySound product with low and high options, which consists of spea
additional machinery leasing cost for SkySound: Low and High options is 750,000.00 TL per year. The current Manufacturing Fixed Cost for Sk

SkyBox Refrigerator & SkySound: High Option Cannibalization Case

Now, lets suppose that the company has decided to introduce only SkySound: High option in the following year on top of the existing SkyBox Refrigerato
What is the maximum cannibalization point for this case? (Don't forget to consider the change in fixed cost.) If the introduction of SkySound: High has ca
a current cannibalization of 3500 units on SkyBox Refrigerator, without making any calculation, what can you comment about the following years' gross
margin, compared to previous years'? Considering the introducion of only SkySound: High option, what is the change in gross margin as a percentage? If
business wants to decide between introducing only SkySound: Low and SkySound: High options, which one of these options is more profitable?

Goods Price Production Cost Contribution Margin 2022 Sales


SkyBox Refrigerator 1,675.00 609.94 1,065.06 160,000.00
SkyBox Refrigerator & SkySound: High Option 2,199.00 1,199.54 999.46 -

Gross Margin 166,136,136.00

Maximum Cannibalization Point


and high options, which consists of speakers included in the SkyBox refrigerator. The
current Manufacturing Fixed Cost for SkyBox Refrigerator is 4,273,000.00 TL.

n top of the existing SkyBox Refrigerator.


e introduction of SkySound: High has caused
mment about the following years' gross
nge in gross margin as a percentage? If the
se options is more profitable?

2023 Sales Current Cannibalization 3,500.00


156,500.00
13,000.00 Cannibalization Effect 3,727,699.85

174,651,416.20

11,495.14

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