Bay Back Simulation

4381 words 18 pages
Decision Rationale
Decision 1 In determining our initial strategy, we knew that we wanted to focus on the product that would be most profitable and key in on features that are important to the customer. Looking at product sales in 2008, the NiMH sold 28.0 M units and the Ultracapacitor sold only 4.3 M units. Based on these sales, the NiMH generated $280.3 M and the Ultracapacitor generated $86.2 M. In addition, when reviewing the Income Statement, the NiMH produced a profitable contribution in the years 2006 through 2008. The Ultracapacitor, on the otherhand, produced an unprofitable contribution during the same timeframe. Based on these figures, we decided to focus on the NiMH. We relied on the income statement to determine the
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The Ultracapacitor decreased by 34%. We did not change the price of the Ultracapacitor, but lowered the price of the NiMH yet again to $7 due to the market pressure. We discontinued our R&D investments in the NiMH due to the declining sales and invested $3M in the Ultracapacitor’s process improvement.

Decision 7 We estimated a dramatic increase in NiMH sales in 2015, up to $23M due to the previous year’s results. We slightly lowered our forecast of the Ultracapacitor to $4.5M which is what sales produced in the previous year. We kept the selling price the same for both items. We continued to invest $3M in Ultracapacitor process improvement. Because we started focusing on the Ultracapacitor instead of the NiMH, we also invested $2M in Ultracapacitor energy density. Energy density was chosen due to the perception of importance by the client.

Decision 8 For the last year of the simulation, we kept our forecasts relatively the same as 2015. We felt that the markets were stabilizing as there was not as large of a variance year after year. In 2016, we estimated NiMH sales of $22M and Ultracapacitor sales of $4.6M. We did not change the selling price of either item and the R&D investments were kept the same as 2015, with a stronger emphasis on the Ultracapacitor.

Results In our simulation we achieved results through spending time on research and


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