Free Essay

Superior Manufacturing

In: Computers and Technology

Submitted By ammarbk
Words 2066
Pages 9
Homework 5: Oracle Crystall Ball MIS 6543 Business Analytics Fall 2013 Arkansas State University Instructor: Dr. Ahmad Syamil Due date: 8:00 PM, Wednesday, December 11, 2013. Name your homework files using your name and location, and then put them on Blackboard>MIS6543> Course Tools>Journals>Digital drop box>Create Journal Entry>Write an appropriate title and message including whether you are an online or face-to-face student> Attach file. Inform me by email after you submit your file. Of course you can submit your homework earlier. If you are an ASU Jonesboro face-to-face student, you must also submit the complete hard copy of your work under my office door (BU 406) by the due time. Do not submit the hard copy of the answer to each problem oneby-one. You can get Oracle Crystal Ball simulation software for chapter 13 from http://www.oracle.com/crystalball/index.html or http://www.oracle.com/technetwork/middleware/crystalball/downloads/index.html ?ssSourceSiteId=ocomen If you never register on the Oracle website, Oracle will ask you to register before downloading Oracle Crystal Ball (CB). Furthermore, you can only use the CB trial version for 2 weeks. Therefore, you should start working on this assignment no sooner than 2 weeks before the day you plan to submit this assignment. Using an older version of CB is also acceptable. Use Google. If you use one version for 2 weeks, you may be able to install another version for another 2 weeks. Consequently, you can use CB for 4 weeks. Although your operating system is 64-bit Windows Operating System, most likely you need CB for 32-bit Microsoft Office because the Office installation is by default the 32-bit version of Office. Only companies that process large files require the 64-bit version of Office. *** As I informed you earlier, you can put more than 1 linear programming (LP) problem in one Excel file. However, you must create 1 Excel file for each CB problem. Furthermore, you can only open 1 Excel CB file at a time. If not, CB creates many graphs from all files that you open. ****

Page 1 of 6

You can also use Monte Carlo simulation and risk analysis software other than Oracle CB from the following link http://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-ins Some of the software listed on the link above have no time limit. Furthermore, the closest replacement for Oracle CB is @Risk from Palisade Corporation http://www.palisade.com/risk/ Two problems: Problem 1: Chapter 13 - Computer Simulation with Oracle Crystal Ball for Business Planning. This is an easy problem. Work on this problem first. Taylor Jovi is the CEO of a company that has 5 divisions. She is modelling how much sales will be generated by each division during 2014. Her estimates are summarized in the following table: Divisions
Book publishing Printing Local newspaper Magazines Children books

2013 Sales
$5,432,231 $2,503,213 $1,467,642 $2,546,734 $3,542,532

Estimated Growth Rates in 2014
Triangular dist. Min. = - 5%, most likely= 1%, max = 4% Normal dist., mean = 5 %, standard dev. = 7% Uniform dist., min. = - 10%; max = -2% Lognormal dist. Location (only for the newest CB) = 0%; Mean = 10 %, standard dev. = 10% Beta dist. Min = 2%, max = 4%, alpha= 6, beta = 2.

Create a spreadsheet to simulate the total revenues that could occur in the coming year. Run 500 replications of the model and do the following: a) Construct a 95% confidence interval for the average level of sales she could expect for 2014. Refer to pages 528 to 530. b) What are the chances that total sales in 2014 will be larger than those in 2013? c) What is the probability that the total revenues will be smaller than $15.6 m in 2014? d) What is the probability that the total revenues will be between $15.5 m and $15.8 m in 2014? e) What is the probability that the total revenues will be larger than $16 m in 2014? If a problem consists of several parts such as (a), (b), and (c), you must also mark your answer with (a), (b), and (c). You must include a print screen similar to figure 13.20 on page 540 to support your answer to each part of the homework problems.

Page 2 of 6

Problem 2: Chapter 13 - Computer Simulation with Oracle Crystal Ball for Retirement Planning. Lil Jonas works for Arkansas Pacific Group (APC), a private equity company, which allows him to contribute up to 9 % of his salary and other incomes into tax deferred savings plan. He always maximizes his contribution. APC matches a portion of employee contributions. Depending on APC’s performance, APC contributes at least 25 % but no more than 100 % of the employee’s contributions. Almost every year APC contributes about 70 % (Hint: Use the triangular distribution). He is currently 30 years old and makes $ 60,000. He wants to retire at age 60. He expects that the yearly growth of his salary and other incomes follows a normal distribution with a mean = 3% and standard deviation = 5%. He invests his retirement money in mutual funds. His investments consists of his contribution and his company’s contribution. He expects the annual returns of his investment to vary according to a lognormal distribution with an average of 4 %, a standard deviation of 6 %, and location (only for the newest CB) = 0%. Use 500 replications. Assume that the yearly return of his investment money is calculated at the end of each year. Hints for parts (a), (b), and (c) below: When you use Cristal Ball, do not make one Excel file with 3 different worksheet. Create three different Excel files using copy and paste. a) If he contributes 9 % of his income to the plan, how much total investment including all returns can he expect to have at age 60? Construct a 95% confidence interval. b) Suppose he made a 9 % contribution to his plan for 8 years, from age 30 to 37, and then stop contributing. (b.1) How much of his own money he would have invested and (b.2.) How much total investment including all returns can he expect to have at age 60? Construct a 95% confidence interval. c) Now suppose he contributes nothing for the first 8 years of the plan and then contributes 9% for 23 years from age 38 to age 60. (c.1) How much of his own money he would have invested and (c.2) How much total investment including all returns he can expect to have at age 60? Construct a 95% confidence interval. . d) What did you learn from his example? Notes: 1. You can get your homework and assignment files from: 1. Your @smail.astate.edu email registered at Blackboard. 2. Blackboard 8 http://blackboard.astate.edu/. 3. Your classmate. 2. Most of the problems require Microsoft Excel. It is your responsibility to be familiar with the Microsoft Excel version you are using (2000, 2003, 2007, or
Page 3 of 6

2010). The ASU College of Business computer labs use Excel 2010. Please buy or borrow any Excel book if necessary. You can get and read Excel ebooks on-line from the ASU library. ASU students can get Excel, Symantec EndPoint Anti Virus, and other software free of charge from http://www2.astate.edu/a/finance-admin/its/ 3. Creating homework files properly including MS Excel files is a big part of this class. You must create your homework file from scratch. If your file does not work properly before the due date, please do not send your file to someone (including to me) and ask someone to fix your file. I can give you some hints but I do not fix your file. If I fix your file, it means that I am the one who finishes your homework. You, and not the instructor, have the responsibility to finish this assignment. 4. Start this assignment as early as possible. If you wait until the last minute, you will not be able to finish this assignment on time. 5. Drop your homework files in Blackboard Digital Drop Box. Name your file using: FirstName_LastName_Location_Face_to_Face_or_Online_HW#_Problem#_ MIS6543_Fall_2013. Example: John_Public__Jonesboro_F2F_HW5_Problem1_MIS6543_Fall_2013. 6. If you are in a hurry, you can e-mail your virus-free homework files to me. My computer will automatically delete your files if they are not virus free. You can drop your files in the Blackboard Drop Box the next day. 7. Type the following information on the first worksheet (cover sheet) of your Excel file: • • • • • • • Course name, i.e., MIS 6543 Business Analytics. Term, i.e., Fall 2013. Homework or assignment number, e.g., Homework 5. Your name ASU campus location and status (face-to-face or online) The name of the instructor, i.e., my name. Type and sign or initial the following:

“I did not copy any other person’s homework. I did not share my work with anybody else. I created this homework from scratch. I did not revise or copy and paste any other files. Nobody else helped me create my homework files. If I did any dishonest activities, I will get an “F” in this course and may be expelled from ASU.” Name: _______________________ Date: ____________
Page 4 of 6

8. Before submitting your file, please create a footer and header on each worksheet. If you use Microsoft Excel 2007 for Vista, click “View,” and then “Header and Footer,” If you use Microsoft Excel 2003 for Windows XP or lower, click “View,” then “Header and Footer,” and finally “Custom Header.” If you use Microsoft Excel 2000 or lower, you will see seven small buttons/icons. If you use Microsoft Excel 2003/XP, you will see ten small buttons/icons. Left section: type your name (s). Right section: Click “date” and “time” icons. Click the appropriate icon to put the following footer: Left section: Click “file name” icon. 9. Please type the title (problem #, page #, and so on) on top of each Excel worksheet/file. For example: Problem 1: Chapter 13 - Computer Simulation with Oracle Crystal Ball for Business Planning. 10. Submit 1 file for each problem. Homework must be neat, and easy to read. Don't make someone hunt around your pages to find your solutions. Write your solutions so that other people can read and understand your solutions. If a problem consists of (a), (b), and (c), you must also mark your answer with (a), (b), and (c). I grade not only the content but also the organization of your homework. Format your answers and tables nicely. Please also use this class to learn Excel and to learn how to organize your work properly. 11. If it is possible, print each problem on one page. If not, at least do not split a table/graph, i.e., do not print a table/graph on two pages. Microsoft Excel 2003/XP: To print a graph on one page, use the following procedure: a. Click the graph you want to print. b. Click “File”, then click “Print Preview” to make sure that everything is fine. c. Click “Close” if you would like to edit your graph. Otherwise, click “Print.” You have several ways to print a table on one page. You can use the following procedure: a. Highlight the cells you want to print. b. Click “File”, then click “Print,” and then click “Selection.” c. Click “Preview” to make sure that everything is fine. d. Click “Close” if you would like to edit your table. Otherwise, click “Print.” If the table is big, you can also use the following procedure to print table/cells on one page:
Page 5 of 6

a. Highlight the cells you want to print. b. Click “File” then “Print Area” then “Set Print Area.” c. Click “File” then “Preview” then “Setup.” d. Click “Page” tab. e. Select “Portrait” or “Landscape.” f. Under “Scaling,” please check "Fit to 1 page(s) wide by 1 tall." Click OK. g. Click “Close” if you would like to edit your table. Otherwise, click “Print.” Please always use “Print preview” before printing your Microsoft Excel/Word document to make sure that your printout will be OK. If you use Microsoft Excel 2007/Vista, click the quick access button on the upper left of your computer screen > Print > Print Preview > and then follow the instruction above.

Page 6 of 6…...

Similar Documents

Premium Essay

Superior Manufacturing Company Case

...Description: The Superior Manufacturing Company received a net loss income statement for a good business year (2004). SMC has only 3 products and lots of competitors with similar products. So, price cutting always need a reduction by all the competitors in this industry. The manufacturing strategy of SMC is based on the ‘dedicated factory’, which means each product has its own productive factory. And SMC has a simple cost system. This cost system has 2 categories of costs. First one refers to the costs can be tied directly to the manufacture of specific products. Second one refers to the indirect costs and other costs. Problem and issue: SMC uses a new standard cost system in 2005 which is used to value inventories, prepare budgets, and analyze performance. The manager thinks the product 103 should be dropped for its high cost which could not be cut down, and the product 102 has an increasing demand. Also, the managers want to make a price reduction. However, they find that the costs are too high to support the price reduction. Does the cost system of SMC work effectively? Firstly, we calculate the loss of drop of product 103. We use the data of 2004. If we drop 103, the operating loss would be 4933. Secondly, we calculate the reduction price of product 101. If price of product 101 = 24.5 Profit = 750000*[24.5*(1-1.08%)-10.48]-12.36*996859 = -2004450 If price of product 101 = 22.5 Profit = 1000000*[22.5*(1-1.08%)-10.48]-12.36*996859 = -544000 We can see when the...

Words: 331 - Pages: 2

Premium Essay

Superior Supermarkets

...Superior Supermarkets Everyday Low Pricing In: Business and Management Superior Supermarkets Everyday Low Pricing Superior Supermarkets (SS) is a division of Hall Consolidated, a privately owned wholesale and retail food distributor. Hall distributes food and related products to some 150 company-owned supermarket units and about 1,100 independent grocery stores in the U.S. through 12 wholesale distribution centers. Superior is the smallest of the three supermarket chains owned by Hall, with sales of $192.2 million in 2002. Sales of three Centralia stores were $14,326,700 in 2002. Randall Johnson, the District Manager for the Centralia stores, has recommended that they implement everyday low pricing (ELP) since Superior’s prices are higher than the competition at a time of growing price consciousness, and that the price differential could cause them to lose market share. Problem Statement Superior Supermarkets (SS) must decide whether o not to pursue an everyday low pricing (ELP) strategy at its three Centralia MO locations. Analysis Three viable alternatives have been found. Alternative #1 is to do nothing. Do not adopt ELP and keep the current promotional budget. If market share continues to decline, at the growth rate of -0.53% or greater, this alternative would be deemed unsuccessful. Conversely, if market share remains stagnant or improves, this strategy would prove to be prudent.    Alternative #2 is to implement a ‘limited ELP’ model. By marginally increasing......

Words: 324 - Pages: 2

Premium Essay

Superior Manufacturing Company

...CONTENTS Analysis of the case 2 Q1) Do you agree with Walters decision to keep product 103? 3 Analysis of Profit and loss statement 4 Sensitivity analysis 6 Strategic scenarios 8 Q2) Should superior lower as of January 1, 2006 its prices of product 101? To what price? 10 Q3) why did Supreme improve profitability during the period of January 1 to June 30, 2005? 13 Analysis 14 Q4) why is it important that Superior has an effective cost system? 17 What is your overall appraisal of the company’s cost system and its use in report to management 18 List the strengths and weaknesses of the system and its related reports for the purpose management uses the system’s output 18 What recommendations, if any, would you make to waters regarding the company’s cost accounting system and its related reports? 19 Initial Analysis of Superior Manufacturing Company Case :- 1) After death of Richard Harvey (2004), founder and president of Superior Manufacturing Company (SMC), Paul Harvey took over. Paul Harvey had only 4 years of experience. Soon followed serious management problems because of some bad decisions made by Paul Harvey. The income statement of 2004 reflected net loss of $0.68million in a good business year. To solve this problem Herbert Waters was brought over as General Manager of SMC. 2) SMC manufactured 3 different products namely 101, 102, 103 and was among the top 8 companies in the industry. Samra Company was market leader and announced price annually and......

Words: 4716 - Pages: 19

Free Essay

Superior Manufacturing Company

...In Class Quiz October 8, 2013 Question: What factor or factors explain real wage convergence between the old world and the new during the period roughly 1870-1914? Did everyone benefit equally from the process? Answer: Before talking about convergence, it useful to say something about the level of real wages in the old world and in the new. In the old world, wages were relatively low because there was an abundance of labour while in the new world there was a scarcity of labour so that real wages there were relatively high. The question then: what forces were operating during this period to push up the real wages in the old world and/or down in the new world (and to move land rents in the opposite direction)? As many of you said, there were essentially three: 1. Migration, the movement of young, able-bodied, unskilled, mostly male workers from the old world to the new, pushed up the real wage in the old world as the labour force shrank and caused it to decline in the new world as the labour force increased. O’Rourke and Williamson maintain that migration explains most of the convergence during this period – in fact, it over-explains it. 2. The second was commodity market integration, thanks to technological advances in transportation – steam ships, railroads, refrigeration – that substantially reduced the cost of moving goods between the old world and the new and increased the variety and type of goods that could be moved. As a result, natural resources and......

Words: 482 - Pages: 2

Premium Essay

Superior Manufacturing Company

...DI MILANO Master of Science in Management, Economics and Industrial Engineering [pic] Management Control Systems Prof. Paolo Maccarrone Second Assignment: Superior Manufacturing Company Analysis Group Ferrario Andrea 709407 Rognoni Susanna 720851 Taiana Marco 672497 Trifonov Angel 720619 A.Y. 2007/2008 Contents Q1.Do you agree with Water’s decision to keep product 103? 3 Analysis of the P&L statement of 31 December 2004 3 Sensitivity analysis 5 Strategic scenarios 9 Q2. Should Superior lower as of January 1, 2006 its price of product 101? To what price? 11 Q3. Why did Superior improve profitability during the period January 1 to June 30, 2005? How useful was the data in exhibit 4 for the purpose of this analysis? 14 Revenues 15 Costs 15 Q4. Why is it important that Superior has an effective cost system? What is your overall appraisal of the company’s cost system … 19 Why is it important that Superior has an effective cost system? 19 What is your overall appraisal of the company’s cost system and its use in report to management? 19 List the strengths and weaknesses of the......

Words: 7176 - Pages: 29

Premium Essay

Superior Manufacturing

...--------- + ---------- +.... + ----------  (1 + R) (1 + R)^2 (1 + R)^8  Where R is the required return this is a study guide, not a cheat sheet.  Net Present Value:  NPV = PV - TI where TI = Total Initial Investment  Using a calculator we find that:  PV = $2,229,365.07  NPV = PV - TI = $2,229,365.07 - $1,200,000 = $1,029,365.07  ----------------------------------------------------------  3. Based on your answer for Q2, do you think the project should be accepted? This is a study guide, not a cheat sheet. Why? Assume Superior Manufacturing has a policy of not accepting projects with life of over 3 years.  Definition of Payback Criterion:  -Accept a project if its payback period is less than maximum acceptable payback period.  -Reject a project if its payback period is longer than maximum acceptable payback period.  The payback period is less than the 3 years, then the project fits the limit policy of Superior Manufacturing, then the project is acceptable by this criterion. This is a study guide, not a cheat sheet.  The NPV is positive and very atractive. The NPV criterion has considerable merits:  - It takes in to account the time value of money  - It considers the cash flow stream in its project life  The NPV Decision Rule says:  -Accept a project if NPV >= 0.  So by this criterion the project is also acceptable.  -----------------------------------------------------------  4. If the project required additional investment in land......

Words: 8914 - Pages: 36

Premium Essay

Superior Manufacturing

...Introduction Superior Manufacturing Company is a company that had a loss of $688,000 in 2004. Manufacturing products 101, 102, and 103, cost analysis shows that products 102, and 103 have been unprofitable. SMC is also a company that has many competitors with products that are very similar so raising prices would cause customers to search for alternatives. The dominant competitor, Samra Company has been the cost regulator in the market by setting prices to be matched by competition. The manufacturing process uses three horizontally integrated dedicated factories that do not typically operate at capacity. Superior Manufacturing Company also uses a standard value costing method that is based on past performance. Decision to keep Product 103 Continuing production vs. Stopping production assumptions * Continue to pay fixed costs, not sell machinery immediately, and cut power to the building * Immediately reduce all direct labour costs, and reduce indirect labour costs to 5% for administration involving the property Table 1 (In thousands $) | Continue Production | Stop Production | Rent | $ 1,882 | $ 1,882 | Property Taxes | $ 401 | $ 401 | Property Insurance | $ 534 | $ 534 | Compensation Insurance | $ 458 | $ 5.77 | Direct Labour | $ 6,879 | | Indirect Labour | $ 2,309 | $ 115.45 | Power | $ 302 | | Light and Heat | $ 106 | | Building Service | $ 75 | | Materials | $ 4,851 | | Supplies | $ 350 | | Repairs | $ 104 | | Total | $......

Words: 1313 - Pages: 6

Free Essay

Superior Manufacturing

...Nopat ( UO * 1-TX) +amortizaciones +provisiones +depreciaciones =FCB -DIF KTNO -DIF AF OP =FCL +DIF DEUDA -GASTOS FINA *(1-TX) =FL PARA LOS ACCIONISTA + DIF KAPITAL -DIVIDENDOS = FCN Liquidez Kw: Act C-Pasivo C Prueba acida (AC-INV)/PASIVO C Razon c=(ac/pc) Palanca: me/pkt CICLO NEGOCIO = ROTACION C*C DIAS+ ROTACION INVEN DIAS CICLO DE EFECTIVO= CICLO DEL NEGOCIO – CUENTAS *PAGAR Actividad Rot c*p=(compras/c*p)= veces Rot inv= (cv/inv)= veces ROTACION CUENTAS* C=(ventas/c*c)= vece ROT AC=(VENTAS/ACTIVOS) KTNO=INV+C*C-C*P AO=KTNO+AF EBITDA= UO+DEP+AMORT+PRO MARGEN O= UO/ VENTAS CONT FINAN=ROA-CD(1-TX)*(D/P) = ROE-ROA NOPAT=UO(1-TX) GASTOS FINAN= CD CP*DCP+(CDLP*DLP) APALNCAMIENTO FIAN (Aon/PATRIMONIO) RAZON ENDEUDAMIENRO=DEUDA t/ACTon ESTRUCTURA DE K =(DEUDA total/PATRIMO) CONCENTRACION (DCORTO PLAZO/DEUDA total) CONTRIBUION=EBIT/GASTO IN O UO/ GI ROA=NOPAT/AON ROE=UNF/PATRIMONIO Contr f= roe-roa EVA=UODI-(WACC*aon) WACC=CD*D/D+P+KE*(P/D+P) INDICE DUPONT ROE ANALIS DUPINT EMPRESAA | ((V/aon)*(AON/PATRI)*(UO/VENTAS) | | | *APALNACAMINETO*ROT ACT*MARGEN OP | | | | | ABALISI DUPONT ACTI | (UO/VENTAS)*(VENTAS/ACTIVOS) | | | MARGEN OP* ROT ACT | Deuda corto plazo%=deuda cp/deuda total Deuda plazo%=deuda lp/dt (dcp%*cdcp)+(dlp*cdlp)=COSTO DE LA DEUDA WACC=CD(1-TX)*(D/D+P))+(KE*(P/D+P) EVA=NOPAT-(WACC*AON) Pkt=ktno/ventas TIC = (RENT NETA DEL ACTIVO*TRU)/1-RENT OP ACT* TRU TCS= (RENT NETA DEL......

Words: 293 - Pages: 2

Premium Essay

Superior Supermarkets

...Superior Supermarkets Memo Memorandum To: James Ellis, President of Superior Supermarkets CC: Randall Johnson, District III Manager of Superior Supermarkets From: Matthew Clemente RE: Potential Everyday Low Pricing Strategy Date: April 9, 2010 The challenge presented to the President of Superior Supermarkets James Ellis and his district manager Randall Johnson is whether or not to implement an everyday low pricing strategy to the Superior Supermarkets stores in Centralia, MO. Superior Supermarkets’ current pricing strategy is a high-end branding strategy, giving them the highest prices in Centralia. With their declining market share the past seven years (they currently have 23% market share in 2002, down from 31% just three years ago; see Exhibit 2) Superior Supermarkets looks to increase their rising revenues from the past three years (Exhibit 4), regain their past successful market share and maintain their already successful contribution margin. To accomplish these three goals, there are several alternatives that Superior Supermarkets could employ to help them retake the market in Centralia. The three locations of Superior Supermarkets in Centralia certainly give them precedence in location, but their market share should certainly be higher with the various options of location they give their customers. However, customers in Centralia are certainly price-sensitive and a new pricing strategy must certainly be considered to give Superior Supermarkets......

Words: 1216 - Pages: 5

Free Essay

Superior Manufacturing Co.

...105-S16 REV: 12 AGOSTO, 2004 JAMES W. CULLITON DAVID F. HAWKINS JACON COHEN Superior Manufacturing Company En febrero de 2005, Herbert Waters fue nombrado director general por Paul Harvey, presidente de Superior Manufacturing Company. Waters, de 56 años de edad, poseía una amplia experiencia en la fabricación de productos similares a los de Superior. El nombramiento de Waters era consecuencia del problema planteado por la muerte de Richard Harvey, fundador y presidente de Superior hasta su fallecimiento al comienzo de 2004. Paul Harvey, de 34 años de edad, tenía solamente cuatro años de experiencia de trabajo en la compañía. Su padre proyectaba entrenarle durante un período de diez años, pero su prematura muerte le había impedido realizarlo. El joven Harvey se convirtió en presidente a la muerte de su padre, y había ejercido pleno control en la compañía hasta el momento en que Waters entró a formar parte de ella. Nueva dirección Paul Harvey sabía que a lo largo de 2004 había cometido varios errores y se daba cuenta de que había decaído la moral de la organización, al parecer debido a la falta de confianza en él. Cuando dispuso de la cuenta de pérdidas y ganancias de 2004 (véase Anexo 1), la pérdida de casi 688.000 dólares sufrida en un año de actividad económica general favorable, le convenció de que necesitaba ayuda. Consiguió captar a Waters, que estaba trabajando en una empresa competidora, ofreciéndole una participación de capital además del sueldo, sabiendo......

Words: 3020 - Pages: 13

Premium Essay

Superior Manufacturing Company

...Superior  Manufacturing  Company     Description   Superior   manufacturing   company   produces   three   kinds   of   industrial   products   (101,102   and   103)   in   its   own   dedicated   factories.   It   uses   a   job   costing   system   helping  to  evaluate  and  arrange  the  whole  process  of  production,  which  is  later   replaced   by   a   standard   cost   system   in   2005.   In   the   market   of   similar   products,   Superior   faces   seven   competitors,   one   of   which   is   the   dominant   company   Samra,   a   price-­‐maker   to   some   extent.   As   shown   in   the   figure,   Superior   suffered   a   loss   during   2004.   What   is   worse,   a   weakened   industry   and   some   other   problems   like   price  reduction  are  coming  in  the  following  years.     Problems  and  issues   In   terms   of   management   changes   and   other   reasons,   Superior   suffered   a   big   loss   even   during   an   optimistic   business   year.   It   is   obvious   situation   didn’t   change   better  in  the  next  year. ......

Words: 469 - Pages: 2

Premium Essay

Superior Manufacturing Company

...the prices of materials and supplies in 2006. (did not take into consideration the change of price of sales, admin, indirect labor…) Sensitivity analysis In order to make recommendations for a possible strategic course of actions we need to take in consideration the variance of some key indicators. These are: 1. The operating capacity of the facility and the level at which it operates now. 2. Possible changes on the market volume and company’s market share(expected reactions from the competitors) 3. Potential savings 4. Inventory costs Strategic scenarios Having in mind the analysis of the current situation we could offer some scenarios for strategic actions to the management of Superior Manufacturing. Referring back to the first paragraph we can explore the following options: Stop the production of product 103: 1. Stop production and any business related to product 103. 2. Stop production but outsource it to another company and continue the distribution. 3. Stop production and use the available production capacity in order to produce product 101 or 102. 1. Stopping the production of product 103 in the current situation would mean that the company will no longer produce a non profitable product. This will bring to avoiding a possible potential loss of at about 2.2 million $ assuming expected sales of 1million units. On the other hand it will bring as a loss all the non variable, fixed......

Words: 5438 - Pages: 22

Premium Essay

Superior Manufacturing Company

...the cost associated with product 103 is fixed cost and Super Manufacturing Company will have to bear this fixed cost regardless of its decision to produce product 103 or not. Currently, product 103 incurs net loss of $2.209 million, and if Super Manufacturing Company decides not to produce product 103, then it will incur additional loss of $2.671 million through net contribution lost by product 103. However, if product 103 is dropped then it will increase the net loss of Super Manufacturing Company to $3.359 million. Hence, Waters’ decision to keep the product 103 and use its contributions to cover the fixed cost is a good decision. Q2.)  Should Superior Manufacturing Company lower as of January 1, 2006 its price of product 101? What will be the new price of product 101? The fixed and variable cost structure of product 101 shows that 54% of its standard cost is fixed and 46% is variable. However, a decrease in product 101 sales units will result in lost contribution because the larger part of cost is fixed and Superior Manufacturing Company will have to bear the fixed cost regardless the number of units sold. Hence, lower the number of sales units, lesser will be the recovery of fixed cost, therefore, Superior Manufacturing Company is suggested to lower its price in order to increase number of sales units of product 101. Pricing Decision Based on alternate of sales price and quantity demand, Superior Manufacturing Company is suggested to a set the sales price at $20.50, by......

Words: 864 - Pages: 4

Premium Essay

Superior

... BACKGROUND COMPANY Superior supermarket is the one of division of Consolidated Hall. Consolidated Hall is a privately owned wholesale and retail food distributor. In year 1959, the Hall Consolidated was formed. In year 1970, the first retail grocery store chain was purchased. The superior supermarket chain was acquired in 1975.The Hall distributed food and related products to some 150 company owned supermarket units operating under three supermarket chain names through 12 wholesale distribution centers.By year 2002 also,1,100 independent store also supplied by Hall distribution in Unites States. In the year, the sales were $2.3 billion. In supermarket chain owned by Hall consolidated, Superior supermarket is the smallest compared to three supermarket chain in Hall consolidated. The superior gained with sales of 192.2 million in year 2002.In trade areas with small cities and towns in South Central Unites States, the superior served them conventionally. The median size is about 44,000 square feet in United States. So the superior is considered small because the areas of the superior supermarket just cover about 20,730 square feet. Even though the size is small, the superior was the number 1 or number 2 in ranking of supermarket chain in each of its trade measured by market share. The figure 1.1 below had shown the front view of superior supermarket. Figure 1.1: The view in front of Superior Supermarket. 2.......

Words: 2981 - Pages: 12

Premium Essay

Superior Anufacturing

...Answer Superior Manufacturing could lower their prices from the $24.50 current selling price to $22.50 that Samra is proposing to change its prices to. This would allow Superior Manufacturing to stay competitive. Unfortunately, in doing so Superior Manufacturing would have to sell more of product 101 in order to achieve its breakeven point. The lower the selling price that is charged, the higher the volume of unit sales need to be to support the breakeven. Variable Cost (VC) Fixed Cost (FC) Compensation Insurance 0.39 Rent 0.88 Direct Labor 6.06 Property Taxes 0.29 Materials 3.59 Property Insurance 0.25 Supplies 0.25 Indirect Labor 2.07 Power 0.11 Light & Heat 0.07 Repairs 0.08 Building Services 0.05 Total Variable Cost 10.48 Selling Exp. 4.27 General Administrative 1.62 Depreciation 2.65 Interest 0.25 Less: Other Income -0.04 Total Fixed Cost 12.36 $12.36 (Fixed Cost) x 996,859 (Units Sold) = $12,321,000 (Fixed Costs for 6 months) 750,000 Units x [$24.50 Selling Price x (1 - .0108 Cash Discount) – $10.48 Variable Cost] - $12,321,000 = - $2,004,450 1,000,000 Units x [$22.50 Selling Price x (1-.0108 Cash Discount) – $10.48 Variable Cost] - $12,321,000 = - $544,000 Question 3 Answer Superior......

Words: 960 - Pages: 4