Demand, Pricing, and Contract Terms

Customer Demand 2,159,071

Purchase contract
Purchase contract price per unit $17.00
Purchase contract quantity 2,170,000

Spot market
Spot price per unit $19.76

Salvage value per unit $5.30

Additional production cost per unit $102.50
Sales price per unit $150.00

Calculations Q3 2013
Revenue $323,860,650

Cost calculations
Quantity from purchase contract 2,170,000
Quantity left unused 10,929
Quantity needed to be supplemented from spot market 0

Breakdown of costs
Cost of units from purchase contract $36,890,000
Cost of units supplemented from spot market $0
Total LCD costs $36,890,000
Total other costs $221,304,778
Total Production Costs $258,194,778
Salvage value of unused LCD units $57,924
Cost of sales $258,136,854

Gross profit $65,723,796

Operating expenses
Selling, general, and administrative $37,920,000
Design and research $17,837,500
Total operating expenses $55,757,500

Net Profit $9,966,296

Demand, Pricing, and Contract Terms
Customer demand 2,159,071

Purchase contract
Purchase contract price per unit $17.00
Purchase contract quantity -

Option contract
Option contract quantity 1,550,175
Option reservation price $0.50
Option exercise price $16.75

Spot market
Spot price per unit $19.76

Salvage value per unit $5.30

Additional production cost per unit $102.50
Sales price per unit $150.00

Calculations Q3 2013
Revenue $323,860,650

Cost calculations
Quantity from purchase contract 0
Quantity left unused 0
Quantity needed to be supplemented 2,159,071

First supplement source Options

Quantity supplemented from option contract 1,550,175
Quantity supplemented from spot market 608,896

Breakdown of costs
Cost of units from purchase contract $0
Reservation fee $775,088
Cost of units supplemented from option contract $25,965,431
Cost of units supplemented from spot market $12,029,958
Total LCD costs $38,770,477
Total other costs $221,304,778
Total production costs $260,075,255
Salvage value of unused LCD units $0
Cost of sales $260,075,255

Gross profit $63,785,395

Operating expenses

Customer demand
-$24,90
 Selling, general, and administrative $37,920,000
Design and research $17,837,500
Total operating expenses $55,757,500 Customer demand
-$24,90

Net profit $8,027,895

 20
15
10
5
0
-5

Net profit
Inputs Ranked By Effect on Output Mean

stomer demand
@RISK Trial Version
-$24,90,054.06
For Evaluation Purposes Only $1,85,42,045.24
 Inputs Ranked By Effect on Output Mean

stomer demand
@RISK Trial Version
-$24,90,054.06
For Evaluation Purposes Only $1,85,42,045.24

Baseline = $80,27,523.68

Net profit
Values in Millions ($)
Demand, Pricing, and Contract Terms
Q3 2013 Q4 2013
Customer demand 2,159,071 3,660,046

Purchase Contract
Purchase contract price per unit $17.00 $17.00
Purchase contract quantity

Option contract
Option contract quantity 1,000,000 1,000,000
Option reservation price $0.50 $0.50
Option exercise price $16.75 $16.75

Spot market
Spot price per unit $19.76 $19.76

Salvage value per unit $5.30 $5.30

Additional production cost per unit $102.50 $102.50
Sales price per unit $150.00 $150.00

Calcuations Q3 2013 Q4 2013

Revenue $323,860,650 $549,006,900

Cost Calculations
Beginning inventory 0 0
Quantity from purchase contract 0 0
Quantity left unused 0 0
Quantity needed to be supplemented 2,159,071 3,660,046

First supplement source Options Options

Quantity supplemented from option contract 1,000,000 1,000,000
Quantity supplemented from spot market 1,159,071 2,660,046

Breakdown of costs
Cost of units from purchase contracts $0 $0
Reservation fee $500,000 $500,000
Cost of units supplemented from option contract $16,750,000 $16,750,000
Cost of units supplemented from spot market $22,899,766 $52,554,529
Total LCD costs $40,149,766 $69,804,529
Total other costs $221,304,778 $375,154,715
Total production costs $261,454,543 $444,959,244
Salvage value of ending inventory N/A N/A
Cost of sales $261,454,543 $444,959,244
Gross profit $62,406,106.75 $104,047,656.18

Operating Expenses
Selling, general, and administrative $37,920,000 $37,920,000
Design and research $17,837,500 $17,837,500
Total operating expenses $55,757,500 $55,757,500

Net Profit $6,648,607 $48,290,156

Q1 2014 Q2 2014
2,019,275 1,442,975

$17.00 $17.00

1,000,000 1,000,000
$0.50 $0.50
$16.75 $16.75

$19.76 $19.76

$5.30 $5.30
$102.50 $102.50
$150.00 $150.00

Q1 2014 Q2 2014 FY 2014

$302,891,250 $216,446,250 $1,392,205,050

0 0
0 0
0 0
2,019,275 1,442,975

Options Options
1,000,000 1,000,000
1,019,275 442,975

$0 $0
$500,000 $500,000
$16,750,000 $16,750,000
$20,137,816 $8,751,857
$37,387,816 $26,001,857
$206,975,688 $147,904,938
$244,363,504 $173,906,795
N/A $0
$244,363,504 $173,906,795 $1,124,684,085
$58,527,746.33 $42,539,455.43 $267,520,965

$37,920,000 $37,920,000
$17,837,500 $17,837,500
$55,757,500 $55,757,500 $223,030,000

$2,770,246 -$13,218,045 $44,490,965

Quarterly demand for version of the MC cellphone

Version Q3 Q4 Q1 Q2
1 2,723,463 3,911,950 2,258,557 1,487,500
2 2,464,345 4,223,390 2,661,807 1,390,197
3 2,223,094 3,239,262 2,269,364 1,611,672
4 2,738,725 3,907,584 1,882,534 1,964,036 297366.5
5 3,199,565 4,241,820 1,041,438 1,765,438
6 3,212,175 2,408,890 2,003,061 1,292,325
7 2,356,641 1,898,799 1,967,978 1,675,483
8 1,680,760 4,540,613 1,316,541 1,926,489
9 994,350 3,757,408 1,373,626 1,382,849
10 872,841 3,333,856 2,400,883 721,844
11 2,146,563 2,034,586 2,024,890 1,197,403
12 2,647,838 5,091,078 2,039,626 1,638,323
13 1,511,062 3,548,140 1,784,336 1,401,582
14 1,895,864 4,677,350 1,955,100 1,432,602
15 2,418,814 3,998,852 2,453,802 1,542,571
16 1,011,569 4,429,538 2,466,539 1,063,391
17 1,126,667 3,268,046 2,365,305 1,162,356
18 2,551,808 3,209,706 1,240,559 1,317,488
19 3,246,210 3,820,014 2,860,287
2159071

2159071
 Historical unit price of the LCD module in the spot market
Week 1 21.14
Week 2 21.70
Week 3 17.73
Week 4 12.75
Week 5 26.97
Week 6 16.72
Week 7 20.22
Week 8 13.83
Week 9 17.22
Week 10 19.87
Week 11 17.21
Week 12 26.12
Week 13 15.42
Week 14 19.67
Week 15 19.16
Week 16 12.78
Week 17 16.54
Week 18 21.68
Week 19 23.75
Week 20 17.59
Week 21 19.00
Week 22 17.39
Week 23 17.36
Week 24 23.63
Week 25 20.05
Week 26 16.80
Week 27 25.51
Week 28 17.44
Week 29 25.84
Week 30 18.61
Week 31 12.71
Week 32 16.18
Week 33 13.46
Week 34 21.76
Week 35 26.68
Week 36 22.28
Week 37 17.57
Week 38 13.51
Week 39 21.12
Week 40 26.89
Week 41 26.70
Week 42 23.93
Week 43 24.91
Week 44 14.97
Week 45 24.69
Week 46 25.12
Week 47 24.50
Week 48 17.31
Week 49 15.42
Week 50 17.38
Week 51 18.42
Week 52 21.19
Week 53 15.89
Week 54 19.52
Week 55 12.54
Week 56 14.05
Week 57 23.82
Week 58 18.10
Week 59 25.02
Week 60 16.60
Week 61 24.92
Week 62 16.47
Week 63 25.22
Week 64 25.97
Week 65 23.31
Week 66 21.99
Week 67 23.95
Week 68 18.27
Week 69 14.36
Week 70 14.69
Week 71 18.61
Week 72 14.16
Week 73 17.49
Week 74 21.27
Week 75 14.20