TANRO

production and marketing
Physical Plant

Break Even Analysis
Outsourcing Dependence 0% Manufacturing Automation 0%

powered by:

key performance indic
Fixed Cost Variable Cost

Marketing Investment

Pricing

Projected Demand

Production Capacity/yr Break Even Volume

-break-even formula
x Vol = x Vol + Variable -0

Break Even Revenue Years to Break Even

cost classification
Physical Plant Marketing Dollars Direct Labor Raw Materials Machinery Capital Tool Capital Outsourced Parts

Fixed

break-even graph

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0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

----Total Fixed Cost Total Variable Cost ---

US Dollars (Millions)

--

Unit Volume (Thousan

CFO

Marketing

Manufacturing

Glossary

Help

key performance indicators
Fixed Cost Variable Cost Production Capacity/yr Break Even Volume Break Even Revenue Years to Break Even -------

Fixed Cost Variable Cost Total Cost Revenue BE Volume
0 0 0 0 0 0 0

Unit Volume (Thousands)

Help

Exit

Select Input Sources and Test Data
production and marketing Production Decisions Price < Variable Cost

break-even formula Break Even Formula Correct

cost classification Cost Classification Correct

feedback CFO I'd like you to start by deriving the Break Even formula. Please complete the formula before asking me for feedback again.

Marketing I can't give you any feedback right now because you haven't made any marketing decisions. Please determine how much you want to spend on advertising and how much you want to sell the mower for, then come back to me for feedback.

Manufacturing At this time, I can't give you any feedback because I don't know how much our projected demand is going to be. Please complete the marketing decisions, then come back to me for feedback.

0000004 0.0000005 cost classification-Related User Decision Inputs Physical Plant Marketing Dollars Direct Labor Raw Materials Machinery Capital Tool Capital Outsourced Parts 0.0000001 0 0 0.0000008 US Dollars (Millions) 0.004 0.003 0.000001 beak-even formula-Related User Decision Inputs Position 1 Position 2 Position 3 0.002 0.001 0.0000009 0.0000006 0.Outcomes Resulting from the Test Data Selected key performance indicators Projected Demand Fixed Cost Variable Cost Production Capacity/Yr Break Even Volume Break Even Revenue Years to Break Even -------- production and marketing-Related User D Inputs Physical Plant Outsourcing Dependence Manufacturing Automation Marketing Investment Pricing break even graph 0.0000003 0.0000002 0.005 0.0000007 0.006 Unit Volume (Thousands) .

000 500 Acceptable Lease 59% 17% $ 800. marketing-Related User Decisions Value to Use Input Value Lease FALSE 20% 20 20% 20 $ 500.000 $ 400 $ $ mula-Related User Decisions Value to Use Price Variable Cost Fixed Cost Test data sets Custom Labor Cost Fixed Cost Machinery Cost Test data sets Custom Fixed Variable Variable Variable Variable Variable Fixed Correct Price Variable Cost Fixed Cost Interesting Mistake Price Variable Cost Machinery Cost ion-Related User Decisions Value to Use Input Value Fixed TRUE Fixed TRUE Variable FALSE Variable FALSE Fixed TRUE Fixed TRUE Variable FALSE Correct Fixed Fixed Variable Variable Fixed Fixed Variable Several Errors Fixed Variable Fixed Fixed Variable Variable Variable .000 $ 295 Test data sets Custom Buy 22% 35% 500.Input Sources and Test Data.000 $ 460 Demand > Capacity Lease 20% 20% $ 650.

000 $ 295 Option Buttons Physical Plant Value Buy TRUE Lease FALSE --None Selected-#N/A Option Buttons Cost Classification Fixed --None Selected-Variable Text 4 Variable Cost Outsourced Parts Cost Fixed Cost Test 4 .000 550 $ $ Price < Variable Cost Lease 20% 20% $ 500.BE Volume > Capacity Buy 8% 8% 500.

Option Buttons Value TRUE #N/A FALSE .

User Interface/Test Configuration Input Toggle Use Inputs from: User Interface <- Use this drop down to select whether the m Test (G6:H38) for calculations. (Make sure th

User Interface Inputs These cells pull the User Interface Inputs from the Interface sheet. This cluster represents the Production and Marketing Decisions from the User Interface
Production and Marketing Decisions Buy/Lease Physical Plant Outsourcing Dependence Manufacturing Automation Marketing Investment Pricing $ $ Input Value (buy) #N/A 0 0 (lease) #N/A

This cluster represents the Break Even Formula from the User Interface
Break Even Formula Position 1 Position 2 Position 3 Input Value 0 0 0

This cluster represents the Cost Classification from the User Interface
Cost Classification Input Value (fixed) Physical Plant Marketing Dollars Direct Labor Raw Materials Machinery Capital Tool Capital Outsourced Parts #N/A #N/A #N/A #N/A #N/A #N/A #N/A (variable) #N/A #N/A #N/A #N/A #N/A #N/A #N/A

n to select whether the model should use Inputs from the User Interface (B6:E38) or culations. (Make sure that this value is User Interface before making a web application) Test Inputs . these are the inputs fed into the Calculations and result in the Outputs ==>> The Production and Marketing Decisions to be fed into the Simulation Model Production and Marketing Decisions …from the Test Sheet Production and Marketing Decisions Buy/Lease Physical Plant Outsourcing Dependence Manufacturing Automation Marketing Investment Pricing $ $ Input Value (buy) FALSE 20 20 500...Inputs from the Test Sheet ==>> Inputs for Model Controled by D3.000 295 ==>> Input Value (buy) Buy/Lease Physical Plant #N/A Outsourcing Dependence0 Manufacturing Automation 0 Marketing Investment Pricing 0 0 ==>> …from the Test Sheet Break Even Formula Position 1 Position 2 Position 3 Input Value Price Variable Cost Fixed Cost The Break Even Formula Decisions to be fed into the Simulation Model ==>> Break Even Formula Input Value Position 1 0 0 0 Position 2 Position 3 ==>> …from the Test Sheet Cost Classification Input Value (fixed) Physical Plant Marketing Dollars Direct Labor Raw Materials Machinery Capital Tool Capital Outsourced Parts TRUE TRUE FALSE FALSE TRUE TRUE FALSE The Cost Classification Decisions to be fed into the Simulation Model ==>> Cost Classification Input Value (fixed) Physical Plant #N/A #N/A #N/A #N/A #N/A #N/A #N/A Marketing Dollars Direct Labor Raw Materials Machinery Capital Tool Capital ==>> ==>> Outsourced Parts .

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User Mistakes will flow through the Model.000 3.100.500 38.124 2.500 26.600 1 0 se are the inputs fed into result in the Outputs Marketing Decisions to be mula Decisions mulation Model Break down the Cost Classification cost amount based on whether the user has chosen them to be Fixed or Variable.250 105.250 13. Cost Classification Classification Value Association Variable Physical Plant Marketing Dollars Direct Labor Raw Materials Machinery Capital Tool Capital Outsourced Parts $ $ $ $ $ $ $ Fixed $ $ $ $ $ $ $ Cost $ $ $ $ 100 260. Outsourcing) Direct Labor Matrix Automation 1 Outsourcing 0 2 20 .500 1 0 2 400000 525.001 Actual Price 1 210.000 $ 2.000 $ - Calculate the Direct Labor Cost by using an Interpolation of a 2-D P Direct Labor = Function(Automation.000 52. They utili ultimately the Outputs (just to the right) Calculate the Projected Demand by using an Interpolation of a 2-D P Projected Demand = Function(Price.000 131.000.587 26.250 4.00 on Decisions to be fed into Display Value --None Selected---None Selected---None Selected---None Selected---None Selected---None Selected---None Selected-- $ 24. Marketing Investment) Projected Demand Matrix Marketing Investment 1 Price 1 2 Display Value --None Selected-0% 0% 3 4 5 6 7 8 Normalized 100 300 400 430 500 750 3.Intermediate Calculations These calculations are the heart of the Simulation model.000 52.

000 23.000 Calculate the Machinery Cost by using an Interpolation of a 2-D Plan Tool Capital = Function(Automation.000. Outsourcing) Tool Capital Matrix Automation 1 Outsourcing 1 2 3 4 5 0 20 50 80 100 0 2.000 500.000 6.000.000 2.000 .000 50.000.000 2.000 950.000.000 8.1 2 3 4 5 Normalized 0 20 50 80 100 Actual Value 100 85 50 28 0 87 64 42 21 0 Calculate the Raw Materials Cost across a Vector of values based o Raw Materials = Function(Outsourcing) Raw Materials Vector Outsourcing 1 2 3 4 5 Normalized 0 20 50 80 100 Actual Value Cost 260 220 140 75 32 Calculate the Machinery Cost by using an Interpolation of a 2-D Plan Machinery Capital = Function(Automation.000 18.000 2 20 31.000 17.000.000 310.000.000 1.000 12.000.000 100.000 1.000.800.000. Outsourcing) Machinery Capital Matrix Automation 1 Outsourcing 1 2 3 4 5 Normalized 0 20 50 80 100 Actual Value 0 24.100.000 2 20 1.000 70.000.050.000.

800.000 125.000 90.000 2 20 110. Outsourcing) Production Capacity Matrix Automation 1 Outsourcing 1 2 3 4 5 Normalized 0 20 50 80 100 Actual Value 0 20.000 1.000 250.000 Plug in the values to the Break Even Formula based on the User sel Break Even Formula Production Capacity Matrix Input Value Position 1 Position 2 Position 3 BE Volume BE Revenue Years to BE 0 0 0 Cost Value #N/A #N/A #N/A #DIV/0! #DIV/0! #DIV/0! .000 500.000 450.Normalized Actual Value Calculate the Outsourced Parts Cost across a Vector of values base Outsourced Parts Cost = Function(Outsourcing) Outsourced Parts Vector Outsourcing 1 2 3 4 5 Normalized 0 20 50 80 100 Actual Value Cost 0 67 200 265 364 Calculate the Production Capacity by using an Interpolation of a 2-D Production Capacity = Function(Automation.000 75.000 400.

188 40. 'Good'.995 145.700 1 0 Demand Interpolation Calculations across Marketing Investment axis across Price axis Demand Categorize the User Pricing according to an set scale of values indicating 'Too Low'.317 32. They utilize the User Interface Inputs to calculate important intermediate values and Interpolation of a 2-D Plane of values based on the Price and Marketing Investment User Decisions.500 90.125 437.800 1 0 5 Normalized Price #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A 1000000 Actual Price 1.250 315.000 262. 'Too High' Pricing Range Selection Analysis 0 #N/A Categorize the User Marketing Investment according to an set scale of values indicating 'Too Low'.000 351.750 158.142 5. Local Direct Labor Matrix Automation 3 50 4 80 5 100 Normalized Actual Price Outsourcing 1 0 . 'Too High' Marketing Investment Range Selection Analysis 0 #N/A Interpolation of a 2-D Plane of values based on the Automation and Outsourcing User Decisions.588 39. Local Demand Matrix Marketing Investment 3 500000 656.501 5.050.063 337.200 1 0 4 700000 874. Good'.180 5.lation model.000 525.

000.000 1.000 13.000.000 600.000 4 80 350.00 terpolation of a 2-D Plane of values based on the Automation and Outsourcing User Decisions.000 2.000 85.000 100.0% Machinery Capital Interpolation Calculations terpolation of a 2-D Plane of values based on the Automation and Outsourcing User Decisions.000.000.0% Direct Labor Interpolation Calculations ector of values based on the Outsourcing User Decision.0% 100. Local Machinery Capital Matrix Automation 3 50 50.000.000 310. Local Tool Capital Matrix Automation 3 50 700.100.000 18.000 4 80 64.000 Normalized Actual Price Outsourcing 1 2 across Automation axis across Outsourcing axis 0 20 1 0 2.000 60.0% Raw Materials $ 2 20 220 0.0% 100.000 100.0% Tool Capital Interpolation Calculations .000 92.000.000.000.000 50.000.000 75.000 50.74 50 33 15 0 57 41 27 13 0 42 36 24 11 0 1 2 across Automation axis across Outsourcing axis Direct Labor 0 20 100 85 100.000.000.000 20.000 50.0% 260.000.000 330.000 37.000 5 100 100.000 35.000 5 100 ######## ######## ######## ######## 2.000 42.000 Normalized Actual Price Outsourcing 1 2 across Automation axis across Outsourcing axis Machinery Capital 0 20 1 0 24.000 220.000 2.000.800. Raw Materials Interpolation Calculations Outsourcing 1 0 260 100.000 210.0% 100.000 30.

800.000 1.450.000 4 80 450.000 500.000 1.000 2.200.000 800.Tool Capital a Vector of values based on the Outsourcing User Decision.000.250.000 1. Raw Materials Interpolation Calculations Outsourcing 1 0 0 100.0% - an Interpolation of a 2-D Plane of values based on the Automation and Outsourcing User Decisions.800.000 75.000 5 100 875.000 Normalized Actual Price Outsourcing 1 2 across Automation axis across Outsourcing axis Production Capacity 0 20 1 0 20.0% 100. Local Production Capacity Matrix Automation 3 50 200.000 1.800.100.000 1.000 1.500.000 1.0% Production Capacity Interpolation Calculations a based on the User selected variables for the Formula as well as their other Decisions Cost Value Vector Input Value Fixed Cost Labor Cost Machinery Cost Cost Value 100 260 #N/A $ $ $ $ Building Lease Cost $ ########## Marketing Investment $ Outsourced Parts Cost $ Price Revenue Total Cost Variable Cost $ Raw Materials Cost $ .000 1.000 2.700.000 100.0% Outsourced Parts$ Cost 2 20 67 0.

2 20 .000.100.000 2.000 Display ------- e User Marketing ccording to an set es indicating 'Too 'Too High' tment Range Non-Visual Feedback Outputs Production and Marketing Decisions Value Capacity >= BE Volume Demand >= BE Volume Capacity > Demand Price > Variable Cost #DIV/0! #N/A #N/A FALSE er Decisions.te values and Outputs Here are the Outputs for the Simulation. Most of them are displayed in the several are used solely for feedback purposes. Production and Marketing Decisions Value Projected Demand Cost Classification Value Physical Plant Marketing Dollars Direct Labor Raw Materials Machinery Capital Tool Capital Outsourced Parts $ $ $ $ $ $ $ 100 260 24. User Decisions.000 Display -------#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Display -- Marketing Investment Key Performance Indicators Value Fixed Cost Variable Cost Production Capacity/Yr Break Even Volume Brean Even Revenue Years to Break Even $ $ #DIV/0! #DIV/0! #DIV/0! 20.

000 950. 2 20 31.000.000.000 0.050.0% 0.0% .0% 0.0% $ 24.87 64 0.000 23.0% 0.0% $ 100.000 Decisions. 2 20 1.00 Decisions.000 0.000.

000 Calculations .0% 20.000 0.000 250.000 User Decisions. 2 20 110.100.$ 2.0% 0.

hem are displayed in the User Interface for the User. however.1 #DIV/0! 0 #DIV/0! #DIV/0! #DIV/0! 0 BEV #DIV/0! 0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! bev+.5 #DIV/0! 0 #DIV/0! #DIV/0! #DIV/0! 0 .1 #DIV/0! 0 #DIV/0! #DIV/0! #DIV/0! 0 BEV*1. Break Even Graph Break Even Graph 1 1 1 US Dollars (Millions) 1 1 1 0 0 0 0 0 0 0 0 0 0 0 Unit Volume (Thousands) Fixed Cost Variable Cost Total Cost Revenue BE Volume Break Even Graph Volume 0 Graph Lines Fixed Cost Variable Cost Total Cost Revenue BE Volume 0 0 0 0 0 0 BEV-.

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000.000 Break Even Formula Drop Down Input Value Price Revenue Variable Cost Raw Materials Cost Labor Cost Total Cost Fixed Cost Machinery Cost Building Lease Cost Outsourced Parts Cost Marketing Investment 400.000 ####### ####### Physical Plant Lease Buy --None Selected-Cost Classification Variable Fixed --None Selected-Price Value 1 200 350 500 600 .000 2.000 Input Toggle Use Inputs from the… User Interface Test Marketing Investment Value 1 300.Constant Value Lookups The Values are Looked Up for Reference for use in the Intermediate Calculations and Feedback Option Buttons Value FALSE TRUE #N/A Physical Plant Costs Selection Buy Lease --None Selected-Cost $ $ $ 30.000.

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Analysis Too Low Low Good High Too High Marketing Investment Analysis Too Low Low Good High Too High .

Please complete the formula before asking me for feedback again. Thank You for the Feedback .I'd like you to start by deriving the Break Even formula.

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Th .Total Feedback: I'd like you to start by deriving the Break Even formula. O Pos 2 Close For the second variable. This variable rep Pos 3 Close For the third variable. that the I'd Break like Even you toformula classifyis all complete. but it is not the Pos 2 Wrong The second variable is incorrect. Pos 1 Wrong The correct answer for the first variable is not 0. You are correct th Pos 3 Wrong The third variable is still incorrect. before Please asking com m Incomplete I can see that you started to derive the Break Even formula. BEF Feedback Rules: Nothing Done I'd like you to start by deriving the I'd Break like Even you to formula. Please complete the formula before asking m Label of the Feedback Rule Blank If Rule is FALSE Feedback text . This variable re Cost Classification Feedback Rules: Nothing Done/Incomplete Now that the Break Even formula Now is complete.only used if the Feedback Rule is TRUE. I'd like It is you very to importa classify Reversed Fixed and Variable It seems like you're confused about the meaning of fixed and variab Some Mistakes You still have the following problems with your cost classification: Plant Incorrect The PHYSICAL PLANT is NOT a variable cost. of the costs. 0 is close. start by deriving Please complete the Breakthe Even formula formula. but I'd li Three Wrong It looks like your having some major problems with the break even f Less Than Three Wrong You derived the break even formula incorrectly. 0 is close.

BEF Feedback Summary: I'd like you to start by deriving the Break Even formula. This Tool Capital Incorrect TOOL CAPITAL is NOT a variable cost. . Please complete the formula before asking m Cost Classification Feedback Summary: Now that the Break Even formula is complete. This is Financial Consideration Feedback Rules: No Physical Plant Decision You haven't decided whether or not You we haven't are going decided to buy whether or lease orthe notphysical we are going plant. have any advice to give you right now. I'd like you to classify all of the costs. to This buydecision or leasehas the VC > Price Our variable costs exceed the price we are charging for the mower! BE > 2 years Our break even period is greater than 2 years. This decision has Overall Approval Feedback Summary: I don't not have any advice to give you right now. If we can't get it belo Marketing and/or Manufacturing Problems I think you better check in with our VP of Marketing and VP of Manu Overall Approval Feedback Rules: Approval #N/A Your entire analysis is correct and it looks like we will be able to brea Nothing to Say I don't not have any advice to giveI you don't right not now. This is a var Raw Materials Incorrect RAW MATERIALS is NOT a fixed cost. It is very importa Financial Consideration Feedback Summary: You haven't decided whether or not we are going to buy or lease the physical plant.Marketing Incorrect MARKETING DOLLARS is NOT a variable cost. T Labor Incorrect DIRECT LABOR is NOT a fixed cost. This is co Outsourced Parts Incorrect OUTSOURCED PARTS is not a fixed cost. This is a v Machinery Incorrect MACHINERY CAPITAL is not a variable cost.

Please complete the formula before asking m .Feedback Summary: I'd like you to start by deriving the Break Even formula.

but I'd like you to finish it before I give you feedback. e meaning of fixed and variable costs. This variable represents the costs that are not volume-dependent. but you should select the variable that represents ALL costs t till incorrect.Remember. All of your answers are incorrect. Select the variable that includes ALL volume-dependent costs. but it is not the best choice. and all of the fixed costs as variable. You are correct that this variable should not be volume dependent. if you can't derive the formula correctly. It is very important that this is done correctly. 0 is close. If it is not. the analysis will be worthless. k Even formula. This is considered a fixed cost because it is not dependent on the volume of production. This variable represents of the costs that are volume-dependent. 0 is close. Obviously. You've classified all of the variable costs as fixed. the entire analysis or the first variable is not 0. not just one of them. oblems with the break even formula. . ack Rule is TRUE. I'd like you to classify all of the costs. mplete. Break Even formula. Please complete the formula before asking me for feedback again.the formula before asking me for feedback again. Revenue = ___?___ x Volume? ble. va th your cost classification: NT is NOT a variable cost. s incorrect. On the left side of the equation you should be trying to compute revenues.

RS is NOT a variable cost. sical plant. This is considered a fixed cost because it is not dependent upon production volume. If it is not. This is a variable cost because it is dependent upon production volume. Continue to modify your production and marketing decisions of Marketing and VP of Manufacturing. oks like we will be able to break even within two years. If we can't get it below 2 years. the board will not approve the venture. Excellent work! The board will be very happy. It is very important that this is done correctly. Just look at our break even date . the analysis will be worthless.it can't 2 years. NOT a fixed cost. This is considered a fixed cost because it is not dependent on the volume of production. OT a fixed cost. This decision has a major impact on the analysis so it doesn't make sense for me to look at the are charging for the mower! By definition. AL is not a variable cost. we would never be able to break even on this venture. This is a variable cost because it is dependant upon the volume of production. OT a variable cost. the formula before asking me for feedback again. This decision has a major impact on the analysis so it doesn't make sense for me to look at the results until you've made a decis . f the costs. TS is not a fixed cost. are going to buy or lease the physical plant. This is a variable cost because it is dependent upon the volume of production. This is considered a fixed cost because it is not dependent on the volume of production.

.the formula before asking me for feedback again.

I strongly suggest you review the Reference System and become familiar with this con Revenue = ___?___ x Volume? s. . not just one of them. variable costs are dependent upon production volume. the entire analysis will be useless. e variable that represents ALL costs that are not volume-dependent costs. Fixed costs are not dependent upon production vol production. xed costs as variable.Remember.e formula correctly. he analysis will be worthless.

the results until you've made a decision.f production. look at our break even date . sn't make sense for me to look at the results until you've made a decision. .it can't even be calculated!Try to find a combination of production and marketing decisions that allow us to brea production and marketing decisions to see if we can reduce the break even period.

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and become familiar with this concept. Refer to the Reference System if you still do not understand the difference. t dependent upon production volume. .

. If this combination does not exist.ng decisions that allow us to break even within two years. the board will not approve the venture.

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difference. .

.will not approve the venture.

Thank You for the Feedback I can't give you any . then come back to me for feedback.I can't give you any feedback right now because you haven't made any marketing decisions. Please determine how much you want to spend on advertising and how much you want to sell the mower for.

determine Pleasehow determine much you how Approval Everything looks good from a marketing perspective. the lawn This mower. I think we are going to sell a lot of lawn mowers! Marketing Investment You still haven't blank determined placeholder how much you want to spend on advertising. I th Approval I'm comfortable with your pricing. Please determine how much you . This will help me determine how many mowers we can Incomplete I'd like to know I'd like how tomuch know you how are much going you toare charge going for tothe charge lawnfor mower. If we do not generate enough awareness of our new Too High I normally don't tell people that they are investing too much in marketing. Feedback Summary: I can't give you any feedback right now because you haven't made any marketing decisions. I think this is enough to generate sufficient awareness of the pro Pricing I'd like to know blank how placeholder much you are going to charge for the lawn mower. will help This mewill determine help mehow determine many mow how Too Low I think you are being too conservative with your pricing. I don't think we'll be able to attract mid-range customers at this level. I think we will maximize our revenues at or near this level. I think you can get away with charging a higher Too High Your pricing is too aggressive. Please let me know what your plan is so that I can co Incomplete You still haven't You still determined haven't determined how much you how want much toyou spend want onto advertising. marketing Please decisions. Please let me Please know let what me your know plan what isyour so t Too Low I don't think your marketing investment is sufficient. but I think the amount your pla Approval The marketing investment looks good. spend on advertising. Please determine how much you Marketing Feedback Rules: Nothing Done I can't give you I can't any give feedback you any right feedback now because right now you because haven't you made haven't any marketing made anydecisions.Total Feedback: I can't give you any feedback right now because you haven't made any marketing decisions.

but I think the amount your planning is too high. then come back ell a lot of lawn mowers! ising. s. Please determine how much you want to spend on advertising and how much you want to sell the mower for. then come back to me for fe . eting. I think you'll find that our demand would rise significantly if you reduced the price.s. then come back to me for fe ng decisions. This will help me determine how many mowers we can sell. This should make the venture look more attractive to the board. we are not going to sell enough to break even. Please let me know what your plan is so that I can consider it in my feedback. wer. mid-range customers at this level. erate sufficient awareness of the product. Please determine how much you want to spend on advertising and how much you want to sell the mower for. nerate enough awareness of our new lawn mower. Please determine how much you want to spend on advertising and how much you want to sell the mower for. nues at or near this level. can get away with charging a higher price.

. then come back to me for feedback. ower for.o sell the mower for. then come back to me for feedback.

I can't give you any feedback because I don't know how much our projected demand is going to be. then come back to me for feedback. Please complete the marketing decisions. Thank You for the Feedback .At this time.

I'm not a financi Approval It looks like we have more than enough capacity to meet demand. I'm going to assume Capacity < Demand Currently. I'm comfortable with your analysis from a manuf Feedback Summary: At this time.At I can't this time.Total Feedback: At this time. compl Pl No Physical Plant Decision Even though you haven't decided whether or not you're going to buy or lease the physical plant. If this happe VC > Price I noticed that the variable cost of building the lawn mower exceeds the price we are charging for it. give you I can't any give feedback you any because feedback I don't because know I how don'tmuch know our how projected much our demand projected is going demand to be. I can't give you any feedback because I don't know how much our projected demand is going to be. is going Please to be. Please compl . Please compl Marketing Feedback Rules: No Feedback At this time. it looks like we will not have enough manufacturing capacity to meet our projected demand. I can't give you any feedback because I don't know how much our projected demand is going to be.

Please complete the marketing decisions. . our projected demand. then come back to me for feedback. e physical plant. projected demand is going to be. then come back to me for feedback. Please complete the marketing decisions. able with your analysis from a manufacturing perspective. I'm not a financial expert or anything. but this is obviously wrong.You can increase e are charging for it.emand is going to be. then come back to me for feedback. Make a decision on the physical plant. I'm going to assume we're going to have some type of manufacturing facility. If this happens. I suggest you do something to lower the variable cost. we won't be able to cover all of our fixed costs and the venture will not be profitable. emand is going to be. Please complete the marketing decisions.

such as reducing automation or outsourcing. or increasing the price. .ecision on the physical plant. will not be profitable. but these are also going to incr something to lower the variable cost.You can increase our capacity by increasing the levels of automation and/or outsourcing.

cing. This might reduce . but these are also going to increase the fixed and variable costs of the lawn mower.You can also try raising the price.

y raising the price. This might reduce demand while increasing the profit per unit. .

The output layer consists of the formula cells that also happen to be end-results of the simulation model. independent sets of test data and quickly switch between them. This works fine for a few tests. Efficient Design for Efficient Development As mentioned. All formula cells are either in the middle layer or the output layer. Rather than manually testing the simulation. Basics Fundamentally. all data that feeds into the model makes up the input layer. So to summarize from an architectural viewpoint. and not easily repeatable. It is helpful to be able to quickly test and retest many different scenarios. The input layer consists of data (meaning cells containing values. etc. etc. For example. Input Layer Middle Layer Output Layer Learner Inputs Learner KPIs Instructor Inputs Learner Goals Intermediate Calculations Learner Assessment etc. you will find that testing is one of the most important elements. This includes formulas that depend directly on the input laye as well as formulas that depend on other formulas in the middle layer. a middle layer. . just as a learner will. Plainly stated. all data cells that feed into the model are the input layer. error prone. as is illustrated below. This layer includes input data values provided by the learner at runtime.Simulation Design Methodology When developing a training simulation. We will explore this strategy further below. inconsistent. and an output layer. you will want to test many different combinations of Learner Inputs to verify that the simulation behaves properly in all situations. testing is a vital element in any simulation development effort. it is better to be able to quickly switch between a number of test data sets. The middle layer is formula cells that depend on the input layer. every simulation can be thought of as having exactly 3 layers: an input layer. data provided by an instructor. however performing thorough testing this way is far from optimal because it is time consuming. This simulation spreadsheet employs a design strategy that enables you to store multiple. not formulas). One method for testing is to manually enter the Learner Inputs into the Learner Interface. Input Layer Switch Middle Layer Output Layer Learner Inputs 1 Learner KPIs Learner Inputs 2 Switch Intermediate Calculations Learner Assessment etc.

etc. These are: Break Even Formula. Implementation This method is implemented here on the Config worksheet. running down the cells on the left. Within each grou there are several sets of test data that can be selected independently of the other 2 groups. . Each has an arbitrary number of sets of test data running across the cells to the right. the section marked "Select Input Sources and Test Data" in green allows the simulation designer t pick test data from a number of different 'Input Sources'. Here we see that the Break Even Formula data will come from the User Interface (this is confusing without knowledge of where you are heading). Break Even Formula. the Cost Classification data will come from a test data set that is known to be Correct. On the Config worksheet. and Production Decisions. The Learner Inputs are broken into three independent groups along subject matter lines. In the "Input Sources and Test Data" section we see the three conceptual groups. and the Production Decision data will come from a test set known to cause market This switching ability is set up using Excel's standard features. Cost Classification.etc. and Production Decisions. Cost Classification.

The second 'Input Source' is 'Manual Ad-Hoc' (find better name. we can quickly retry any of these 'Input Sources'. Another useful technique is to aggregate the outputs near the inputs. in the 'Break Even Formula'. and another with an 'Interesting Mistake'. . 2. Here we see an 'Input Source' that has all the 'Correct' selection. This is a place where you can just try values to see what happens to the model. namely Positions 1. The first 'Input Source' listed below is 'UserInterface'. which correspond to the 'Input Variables' below. An arbitrary number of 'Input Sources' can be created. As we build the model. You can check the formulas of the 'Values To Use' to see that the OFFSET and MATCH functions get the appropriate data value for each 'Input Variable'. and 3. Now you can quickly switch 'Input Sources' and watch what happens to the Output Variables. Following the 'Manual Ad-Hoc' are a number of other 'Input Sources' that you may want to be able to quickly re-test to see the how the model behaves. This will get the values entered in the User Interface on the corresponding worksheet. In the case of the Break Even Formula. The 'Value To Use' is the value that will flow into the model. the Break Even Graph. there are 5 'Input Sources'.For example. The 'Value To Use' is determined by the which 'Input Source' the designer selected at the top of the page. and the Feedback from the agents. perhaps just 'Manual'). the learner must fill out the three parts of the BEF.

prior to publishing the simulation to end users. all of the 'Input Source' selections should be set to 'UserInterface' as seen below.Of course. . go to Config sheet now.

So to summarize l formula cells are either in the you will want to test many situations. ulation model. error prone. a middle layer. as is Output Layer Learner KPIs Assessment . and an output s layer includes input data values ta that feeds into the model makes t depend directly on the input layer. ming. and n a number of test data sets. It is helpful to be able design strategy that enables you xplore this strategy further below. inconsistent.nt elements. er. One method for testing s works fine for a few tests.

. Within each group .into three independent groups uction Decisions. en allows the simulation designer to Formula data will come from the assification data will come from a a test set known to cause market est Data" section we see the three nning down the cells on the left.

This is a ual Ad-Hoc' are a number of other haves. ow into the model. 2. You can check the formulas of a value for each 'Input Variable'. namely Positions 1. Here we see an 'Input build the model. . we can quickly switch 'Input Sources' and watch agents. and 3. The 'Value To . there are 5 'Input Sources'.EF. e User Interface on the perhaps just 'Manual'). ula.

s should be set to 'UserInterface' .

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