Rd 3 Debrief Financial Analysis

Round 3 Debrief: Team Andrews

The first three rounds of the simulation have put Team Andrews through quite the roller coaster. Compared to the first 2 rounds, Team Andrews has seen the most success in Round 3. We will be investigating the ins and outs of what we defined as success and how we got there based on our decisions, how we financed those decisions, what our trade offs were in order to reach that success, and the layout of the competitive market place. We will start by analyzing our performance in Round 3 based on our goals and plans form our strategy memo.

Team Andrews is striving to be a nice cost leader. We aimed to focus on the Traditional and Low End markets. We have aimed to have the lowest price as well as have products the customer desires in those segments. In order to have the lowest cost, we aimed to reduce cost. We did this in several ways. First, we increased automation to reduce Labor Costs. By increasing automation you can see the savings on Labor Costs in Round 3 alone. We have saved 25% per unit in labor costs for both Able and Acre and saved 35% for Adam.

Product Original Auto Current Auto Change Savings Per Unit

Able 4 6.5 2.5 25%

Acre 5 7.5 2.5 25%

Adam 3 6.5 3.5 35%

We have also decreased material costs. Below you can see the effect of decreasing MTBF for all our products to the lowest acceptable level. Since reliability is the lowest Buying Criteria for both the Low and Traditional segments, we can trade off having a somewhat unreliable product in order to save on Material Costs.

Product Original MTBF Current MTBF Change Material Savings Savings per unit Units Produced (Thousands) Savings (Thousands)

Able 17500 14000 3500 $0.00 $1.05 1386 $1,455.30

Acre 14000 12000 2000 $0.00 $0.60 3169 $1,901.40

Adam 23000 14000 9000 $0.00 $2.70 1711 $4,619.70

In addition to increasing automation and decreasing MTBF, we have spent money on Training and Recruiting which has...