CAPSIM Exam
500,000; 1,000,000
A 6 month project in R&D costs _____; while a 12 month project in R&D costs _____
the interest rate is 12.6% due on December 31, 2005
A bond with the number 12.6S2005, indicates that
R&D, marketing, production, finance, HR and TQM
A functional manager is responsible for coordinate strategy and tactics across all functional areas of the company exemplified by
The perceptual map
A marketing tool used to track the position of all the company's products against those of its competitors
automation rating
A new unit of capacity costs $6 for the floor space plus $4 times
verify the products entering and leaving a segment, the margin potential for those products, capacity level and the distribution system as compared to competitors
A segment managers task is to
Situational Analysis
A team exercise, designed to help your group understand the current market conditions, designed to help your group understand how the industry will evolve over the next 8 years and a 5 part analysis
Product Age
Age refers to
R + 2.5%
An AAA rating bond with a given prime rate at r, the bond rating slips to B if the current debt interest rate is charged at
decreasing returns overtime
An increase in promotional budgets have:
67%
Assuming no additional product promotion, what percent of customers, reached through last year's marketing campaign will carry over into the current year?
5,3
At the start of the simulation, your production plant has ____ lines with room for ____ more
$5
At what dollar amount above the segment guidelines is all consumer appeal lost?
12%
At what rate is inventory carrying cost charged?
2
At which point does the perceived age of a traditional peak?
65% of the original value
If you sell off a production line, the amount of cash that the company will receive from the sales of capacity will be
13,000,000
If you want to add 50,000 units of capacity to an assembly line with an automation rating of 5, how much will it cost?
accessibility drops to 0% in 3 years
If your company has a sales budget of 3 million and drops it to zero,
26%
If your company offers 90 days account payable policy suppliers will start to withhold material for production at
one round prior to product release
If your team decides to introduce a new product, when should capacity and automation be purchased?
TQM initiatives
Improve product quality while reducing the time and resources required to design, manufacture, warehouse and ship products
process management initiative
Improves business procedures, resulting in improved efficiencies and cost structures
Customers (market segment)
In Capstone, pricing standards are set by
6.5S2003
In Capstone, what would the bond number be for a bond with an interest rate of 6.5% that matures in 2003?
the price is at the low end of the range and the positioning, age and MTBF are superior
In forecasting, it is not likely that you will take half of the sales unless
15
In only one product segment, diminishing returns for distributors is reached at
30
In only one product segment, diminishing returns for inside sales is reached at 30
12
In only one product segment, diminishing returns for outside sales is reached at
have a least two products in the same segments fine cut
In order to achieve 100% accessibility, a team must:
reliability component cost and positioning component cost
In the Capstone simulation, what are the components of a products minimum material cost?
$18 to $35 (80% x 20=16; 150% x 20=30)
In the current contract, the workers wage rate is $20.00 what negotiation position would be considered outside the starting and ceiling amounts?
Higher material cost
Increasing a products reliability will result in which of the following changes to production cost?
Increases
Increasing performance and shrinking size does what to material cost?
segments have an ideal spot where demand is at its highest
Inside each fine cut circle,
12%
Inventory carrying cost is ____% of the average cost of production
reduce labor and material costs
Investing in CEE/Six Sigma can
reduce material costs and labor costs to lesser degree
Investing in CPI can
reduce R&D cycle time and lower R&D costs
Investing in concurrent engineering can:
reduce material costs and administrative costs
Investing in vendor just in time can
at least 1 year
It takes ____ years to invent a product
hourly wage, benefits, profit sharing and annual raise
Labor negotiation includes:
84 days
Labor will strike for a maximum of
price, age, positioning and reliability
Low end customers emphasize buying criteria in which order?
MTBF (performance) > MTBF (high end) MTBF (low end) < MTBF (size)
MTBF in the segments should be
hour increments
MTBF is measured in
price, place, promotion and product
Marketing is concerned with 4 things what are they?
the upper limit in thousands of dollars that teams can issue in stock this year
Maximum issue
10% above the starting positions
Negotiation ceilings which represent the maximum management is willing to pay are always
research and development
New products are created on which spreadsheet?
True
T/F: After you have uploaded your decisions to the website you can change your official decisions as many times as you want prior to the processing date and time of the round
positioning
Size segment customer consider this buying criteria to be the most important
Book value, earning per share and dividend
Stock price is a function of:
Create strategy, coordinate company activities and analyze the market and its competing products
Successful managers will
True (r+2.5%+1.4%=r+3.9%)
T/F: Given a prime rate of r and a short term interest rate of r+2.5, the bond rate for issuing a new bond is equal to (r+3.9%)
True
T/F: Increases in capacity and changes in automation take a full year to implement. Sales of capacity are immediately effective.
current debt, stock issues, bond issues and profits
The Finance Department can use which 4 methods to acquire capital for company activities?
Products become smaller and smaller
What trend can be explicitly observed in the industry in which your company is operating
Expected time a product lasts
What's the measure for product reliability?
Divided in half
When a product is moved to a new location on the Perceptual Map, the perceived age (or Age) is:
20%
When a segments product supply exceeds demand how much appeal, to the customer, will a product priced at $1 above or below the segment price range lose?
immediately upon completion
When an R&D effort started in 2001 completes on September 15, 2002, the project revision kicks in when?
there is a 1 year lag
When going to a new automation level
$600,000 per product
When investing in E-mail, diminishing returns apply after
$800,000 per product
When investing in direct mail, diminishing returns apply after
$300,000 per product
When investing in trade shows, diminishing returns apply after
$500,000 per product
When investing in web media, diminishing returns apply after
Enable
When opening the Excel version of capstone, you should do what to Macros?
the goal is to determine the ideal spot location for each segment during the 8 years
When plotting the segment locations for each round
Low end
When tracking markets segments on the performance and size perceptual map, which segment moves or "drifts" the slowest?
$100,000
When working with distributors, each distributor costs
$50,000
When working with inside sales, each inside salesperson costs
$125,000
When working with outside sales, each salesperson costs
Mean Time Before Failure
"Reliability" is expressed in terms of
performance
Sales channel effectiveness for inside salespeople is highest for
1 year
What is the minimum amount of time that it takes to create a new product?
positioning
What is the most important criteria to a "high end segment" customer?
Investment=capacity•[$6+($4xautomation)]
What is the right formula for capacity investment?
25%
What is the starting awareness percentage of a new product?
$10 million; (1,000,000)*(6+4•1);
What is the total cost in dollars for adding 1.0 million units of capacity to a production line with an automation level of 1.0 and floor space costs per unit of $6? Assume automation costs per unit of $4.
10.5% (10% + 0.5%=10.5%)
What is your bond rate? The prime rate is 10% your current bond rating slipped one category (from AAA to AA)
reliability
What product attributes do performance customers value the most?
Administrative costs
Benchmarking reduces
increase Labor cost
Budgeting money to Quality initiative will lead to these outcomes except
arbitrarily firing employees
Capital needed for company activities cannot be acquired through:
have no impact on perceived age
Changing MTBF will:
positioning
Combining size and performance creates a product attribute known as
low end segment
Customers that want low prices and are willing to sacrifice miniaturization and performance are in the
traditional segment
Customers that want proven products and current technology of moderate size and performance are in the
Size Segment
Customers that want small products and are willing to sacrifice performance are in the
over a straight line 15-year period
Depreciation is calculated:
dividing net profit by the number of shares outstanding
EPS is calculated by
work independently and depend on values entered in other spreadsheets
Each of the spreadsheets
80;150
For wages, the negotiation starting position cannot be less than ___% or more than ____% of the current contract
market segment
Group of customers with similar purchasing concerns
Negotiation ceiling is always 10% above the starting position
How are the starting position and negotiation ceiling related?
add a second shift
How can assembly lines double their capacity?:
budgeting money to quality initiatives
How can the R&D cycle time be reduced?
Accessibility on a scale of 0 to 100%
How is the strength of the sales channel measured?
5 products
How many products does every team start with?
$0.30
How much does it cost for MTBF per 1,000 hours of reliability
400,000
If a line has a capacity of 100,000 units, the cost of changing the automation level 1 unit either up or down is
take longer to move the product across the perceptual map
If a product's automation rating is substantially increased, it will:
$5; 20-(8+7)
If a products price was $20, its material $8, and it's labor $7, the Margin per unit would be:
$8/hour (80% x 10)
If current wages are set at $10/hour, what would be the minimum starting pay that your company would offer?
33%
If there are 4 products listed in the Capstone Courier in the traditional segment that have a customer survey scoring of 32, 28, 22 and 14 then the top products demand would be
The product with 100% accessibility will outsell the other 2 to 1 providing all other attributes are identical
If there are two identical products, one that has 100% accessibility and one that has 0% accessibility then
positioning, age MTBF and price
If you are marketing to high end customers, which criteria are most important to them in order of importance?
3
If you drop your sales budget to zero, accessibility drops to 0% in how many years?
$12 per unit of capacity
If you increase automation from 2.0 to 5.0, the cost is:
it is available in the next year
If you purchase production capacity and automation:
incur a retooling cost
If you reduce automation in the production component of marketing, you will:
0%
On the Perceptual Map, the percentage of customers interested in a product positioned outside of the rough cuts of that product is
down; right
Overtime, the segments will drift in which direction of the perceptual map?
in the rough cut stage of the purchase decision and in the fine cut stage of the purchase decision
Pricing plays a role
decrease labor costs
Quality initiative training can
when a company takes advantage of existing technology
R&D completion time can be shortened
number of projects in R&D, automation rating, and age of the project
R&D completion time depends on
size, reliability, age and performance
R&D projects can change a products:
low automation levels
Rapid movement of an existing product on the perceptual map requires
the day R&D project completes
Repositioning moves a product on the Perceptual Map from its old location to a new one. When does the new location become active?
concurrent engineering (CCE)/Six Sigma
The TQM initiative reduces material and labor costs
causes you to require more man power with lower ratings, and causes you to require less man power with higher ratings
The automation level
is never more than 150% of the current contract
The company's negotiation starting position for wages is
customer survey score and production
The credit policy lag has implications for:
Increases;0.5%;decreases
The interest rate on a bond ___ by ___ for each ___ in the bond rating category
prices, promotion budgets and sales budgets
The marketing spreadsheet is used to set
reliability and positioning
The performance segment places more importance on
size and performance
The potential reach for E-mail is rated as good for the
High end
The potential reach for Trade Shows is rated as good for the
Traditional and Low End
The potential reach for direct mail is rated as good for the
traditional and low end
The potential reach for print media is rated as good for the
zero years for high end and seven years for low end
The preferred product perceived age for each sector peaks at
drop by 50 cents each year
The prices in each segment
awareness
The promotion budget affects
MTBF is raised
The relative cost of a product's material cost increases as:
outside sales, distributors and inside sales
The resources used in the sales budget are
Traditional and low
The sales channel effectiveness for the distributors is highest for
customers want smaller and faster products
The segments all drift to the lower-right section of the perceptual map. Why does this drift take place?
5
The situational analysis consists of ____ parts
Age; Perceived Age
The terms ___ and ____ are used interchangeably in Capstone
make a greater effort by the sales staff which translates into increased demand for that product
The time allocation on the advanced marketing module can be used to
near the center of its circle
The traditional ideal spot is
to make up 27.5% of the electronic sensor market in 5 years from now
The traditional market segment is expected
Performance and Size
The two characteristics that the perceptual map evaluates are
Quality Function Deployment and Benchmarking
These TQM initiatives reduce administrative overhead; reduces the R&D cycle time and enhances the effectiveness of the promotion sales budget
Channel support systems
This process management initiative increases the effectiveness of the sales budget and therefore demand
concurrent engineering (CCE)
This process management initiative reduces R&D cycle time
Quality initiative training (QIT)
This process management initiative reduces labor costs
continuous process improvement system (CPI)
This process management initiative reduces material cost and to a lesser degree, labor costs
Vendor/Just-In-Time Inventory (JIT)
This process management initiative reduces material costs and administrative overhead
Upper left
What section of the perceptual map is considered ideal for the low end segment?
differentiation strategy with a product life cycle focus
This strategy will gain competitive advantage by distinguishing our products with an excellent design, high awareness, easy accessibility, and product extenders. We will develop R&D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. We will price above average. We will expand capacity as we generate higher demand in our markets: High, Traditional and Low End.
All strike settlements should be halfway between the demand and the negotiation ceiling
To run perfectly, all HR department managers should know that
age
Traditional customers consider this buying criteria to be the most important
It is easy to confuse unit market size with dollar market size
Two points that should be considered in your strategy are
repositioning, invention and reliability adjustment
Using the R&D spreadsheet to design your products, you have which of the following projects to choose from?
price and reliability
What 2 factors are considered in both rough and fine cut of the customer buying process?
traditional, low end, high end, size, performance
What are the 5 segments?
higher performance, smaller size and higher MTBF
What are the drivers of material cost?
Price
What are the top buying criteria that low end customers most value?
Diminishing returns
What effect do increases in the promotion budget have on a products awareness?
administrative savings, higher production efficiency, increase demand and reduction of R&D times
What effects do process management initiatives have?
It improves its cash position and its suppliers withhold material for production
What happens to a company when it increases the A/P lag?
it's short term interest rates increase and its bond rating is reduced
What happens to a company when its debt-to-assets ratio increases?
It loses 20% of its appeal
What happens to a product priced at $1 above or below the segment guideline when a segments product supply outstrips demand?
It is reduced by 50%
What happens to a products Perceived Age when it is repositioned in R&D?
the product requires increased time/expense for subsequent short-move repositioning
What is one drawback of increasing automation?
The fine cuts overlap in the beginning and in year 8 only the rough cuts overlap
What is the difference between the market segments at the beginning of the round to the final round?
10
Which Automation rating requires the longest time to reposition a product?
size customers
Which customer group or market segment seeks advanced technology products that focus on small size?
high end customers
Which customer group or market segment seeks cutting edge technology in both size and performance?
performance customers
Which customer group or market segment seeks high reliability and advanced technology products that emphasize high performance?
traditional customers
Which customer group or market segment seeks proven products using current technology?
low end customers
Which customer group or market segment seeks proven products, are indifferent to technological sophistication and are price motivated?
Increased production capacity
Which financial obligation is best satisfied with Bond Issues?
Low end
Which market segment places the most importance on price?
performance
Which market segment places the most importance on reliability?
age
Which of the following buying criteria does not have a rough cut
Quality Function Deployment Effort
Which of the following is an example of a TQM initiative?
employee turnover
Which of the following is not a primary concern for your finance department?
GEMI Sustainability
Which of the following is not a process management initiative available to your company
forecasting analysis
Which of the following is not one of the 5 parts of the situation analysis
performance, high end, and size
Which three customer groups "ride the wave of technology" and are considered to be in the high technology segments?
wage and benefit rates, automation levels, second shift/overtime costs
Which three factors drive labor cost?
increase demand
Within the process management initiatives, channel support systems
reduces R&D cycle time
Within the process management initiatives, concurrent engineering
5%;1.5%
You are charged a _____ brokerage fee to issue stock and ______ brokerage fee to retire stock
allow bonds to mature to their due date
You pay no brokerage fee if you
acquiring the capital needed for company activities, establishing a dividend policy that maximizes the return to shareholders, setting credit policies for customers and supplies and profits
Your Finance Department is primarily concerned with
marketing, finance, human resources and production
Your team will make decisions for
high end segment
customers that are willing to pay for products with cutting edge technology that are fast performing and small in size are in