JA Titan Notes

Balancing Supply and Demand Capital Investment Marketing Production Research & Development Supply $ Demand

Price Low Price= High Volume Medium price = Medium Volume Walmart has low prices and much stock. They pay many workers and for much merchandise but make a profit. They have expanded into Superstores. Medium price = Medium Volume Target has higher prices than Walmart but lower than department stores like Macys. They spend an average amount on workers and merchandise. High price = Low Volume Mercedes Benz sets prices high. The amount of cars sold is lower than other models due to the price. The mark up is amazingly high and that is where profits are made.

Marketing To increase demand of your product you advertise. Advertising will increase your sales. Increased sales = increased demand The questions are Who is the target market? How do I advertise to that market? How much do I spend on marketing to make a profit?

Marketing Venues VIM Mass Mailing FleXiPaper Ads-$2,000 minimum SkyBoard Ads- $4,000 minimum Hologen Ads- $6,000 minimum

Research & Demand R&D is used to improve your product. All the amenities in cars were done through R&D (moon roof, MP3 hook ups, AWD, FWD, Antilock Brakes, Air Bags, Power windows, etc.) Spending in R&D will improve the product and will increase sales eventually. R&D will effect sales when applied consistently and over time. It is NOT a quick fix for demand.

Types of R& D Camera Fusion Power Z-Chip Smell-O-Vision Video Conferencing Gaming Module Salellite Antenna Wafer-thin Case Titanium Case Remote Control

Production How many will be produced? Is high, low or medium volume demanded? In JA Titan production is at its maximum efficiency at 80% of capacity. Capacity = 1,490 units 1,490 x .80 = 1,192 Operating below 80% capacity will cost you more Operating above 80% capacity will cost you more

Capital Investment Capital Investment is improving your business. In JA Titan it specifically means how large your company grows. Decisions to increase CI will not affect your production capacity for 2 quarters. Example: in quarter 3 you increase CI. You will not see an increase in Production Capacity until quarter 5.

Compare your CI to your pricing strategy. They are linked. How? If you have a low $, high volume strategy your CI will need to increase. To keep up with demand, due to your low $, you will need to expand your company.

To grow: CI should be higher than depreciation To stay the same: CI=Dep To shrink: CI<Dep (hint: To grow one unit add $40 to CI. If you want to grow by 100 units add $4,000)