Reaction to Emergency Situation

Capacity Reduction after Emergency Loan in Round 3

Our Capacity
Segment Maximum market size Expected Products Our Products Capacity needed/Product
Product 1 Product 2
Traditional 14936 12 2 1245 1100 500
Low 21713 12 1 1809 1200
High 8487 12 2 707 750 700
Performance 8126 8 1 1016 600
Size 7641 8 2 955 600 500

High segment has excess capacity than needed. Also, the left over inventory in High segment is relatively high compared to
other segments. Hence, decided to bring down the capacity of both high segment products to 650 and free some cash.

Analysis on Discontinuing a product Forecasts

Break Even Analysis of Dixie after Round 3
Current Dixie Capacity 750 Even in worst case
Selling price of Capacity 8775 scenario, our worst
Expected Mkt Share in Worst Case 2%
Expected Mkt Size 8487 performing product –
Pessimistic Market Customer
Expected no. of Sales 212 Dixie showed better Competitor
Price of Dixie 38 forecasts Share Scores
profitability if Scores
Expected contribution margin in
Worst Case 25% continued. Hence, Our primary focus was to come out of emergency
Revenue contribution from Dixie 9.5
Expected returns per round 2016 decided not to situation.
Rounds left 5 discontinue any Followed highly conservative estimates for forecasts to
Worst Case Returns from Dixie 10078
product. avoid over production & save additional production costs
Decision Making Parameters

Parameters Considered for Decision Making

Long term impact on Cash Balance & Competitor Ability to run

Cumulative Profits Emergency Loan Analysis operations till round 8

• Considered future profitability and break even analysis of each decision.

• Maintained a cash balance of ~5 MN to avoid emergency loan. Analysed worst case impact of each decision.

Conflict Resolution

• Formulated optimistic, mean, pessimistic scenarios for each decision New Product Introduction after Round 2
and followed inputs from pessimistic scenario in case of conflict.
• Analysed profitability of different alternatives for every idea. Made Expected Expected #
# Sales of
product
Segment
changes to initial strategy accordingly. For instance, our initial strategy Mkt Size Products (if everything is
considered same)
was to introduce a product in Performance but further analysis
showed traditional segment as more profitable. Hence, introduce new Traditional 9618 12 802
product in Traditional Segment. Performance 3293 8 412