DECISION

ANALYSIS
Group # 5
INTRODUCTION

Goal: Launch an art marketplace that acts as a

platform that connects artists and people interested
in art.
Assignment: To assess if the business model is
generating positive cash flows.
 Problem Statement

“Initial projections showed that project has negative NPV and was not financially
viable.”
 INPUTS
Inputs Min Mean Max Distribution
Percentage of Objects Sold 4% 10% 30% Pert
Objects inserted per month 8000 10000 30000 Pert
Average sales price 100 170 500 Pert
Growth Rate per annum 5% 10% 30% Pert
CPM 10 20 90 Pert
Booking rate 5% 10% 25% Pert
Time online [months] 1 3 6 Pert
Average PI per object 30% 50% 100% Triangle
Web Space per object [MB] 2.6 3 3.4 Normal
Transfer per PI [MB] 0.32 0.40 0.48 Normal
Outputs
Impact of uncertainties
 Sensitivity Analysis of Decisions
Scenarios Commission Discount Rate Cost per Man Day Insertion fee per object Prob. Of Profits Prob. Of Losses
1 15% 15% 400 € 1€ 67% 33%
2 20% 15% 400 € 1€ 81.5% 18.5%
3 15% 20% 400 € 1€ 65.3% 34.7%
4 20% 20% 400 € 1€ 79.8% 20.2%
5 15% 15% 300 € 1€ 69.0% 31.0%
6 15% 15% 400 € 1.5 € 75.4% 24.6%
INVEST OR NOT?
There is a 67% chance that we can
earn a positive NPV with a
maximum of 14 million.
Meanwhile, the 33% downside goes
up to negative 2 million.

Given the profile of the Spiegel

Group, which had revenue of
approximately 322 million in 2005,
the investment seems worth it.
 Group Members:

THANK
Talha Malik

Abdullah Asif

Mujtaba Faruqui

YOU!
Neeha Khan

Dania Khan

Ahmad Khan
ANY QUESTIONS?
Yusra Hameed

Bilal Jadoon
By keeping Man Cost per day 300: By keeping Commission at 20%:
By keeping Discount Rate at 20%: By keeping the Insertion fee per object at 1.5: