Business Simulation 2005 Game in Capstone Project

Total Length: 1270 words ( 4 double-spaced pages)

Total Sources: 0

Page 1 of 4

7, a figure that is much higher than it should actually be. In my opinion, this shows that the inventory value is too small and could be a clue that the company will not be able to handle any raise in sales, simply because it will not be able to cover them.

It would have been interesting to have an analysis of the stock evolution for Digby. However, given the fact that this is an evaluation at a certain given moment, it is impossible to have a tracking view over what has happened on the stock exchange.

Production vs. Capacity

The issue related to the inventory, detailed in the previous paragraph, is best noticed if we look and analyze the inventory figures for each product in the portfolio. This will give a clear measure of the company's production facilities for each product in part and its capacities.

The plants producing three of the products, Daze, Dot and Dune, work at an averagely high number, 68%, 73% and 63%, respectively. We would expect this kind of numbers because they show a moderate pace of production.

On the other hand, Dixie is somewhat working below capacity and thus us clearly shown if we look at the units sold and unit inventory figures. Indeed, the ratio (inventory turnover per product) is 7.8, which may show a buildup in stock.

However, this is nothing compared to Dell. Dell has a plant utilization of 129% and an inventory turnover of almost 35 times. This enormous value comes to show two things. First of all, Dell is selling way faster than it is making stocks. Naturally, from the point-of-view of economic theory, it will not be able to keep up with its level of selling.

The second thing, perhaps even more worrying than the previous, is that the workers in these plants are already working overtime and 2nd shifts in order to meet production deadlines.
This will probably show in the quality of the work produced and will, ironically, probably lead to a decrease in the level of customer satisfaction and customer retention.

I would suggest here a moderate decrease in the production figures, especially given the fact that this product is the cheapest and at the lowest quality levels. In my opinion, the company should rather turn to more profitable products in its portfolio and use the extra workforce in other areas.

Conclusions and Final Remarks

In my opinion, if we look at some of the evaluations presented previously, there are several important things that stand out and that could be mentioned. First of all, in terms of strengths, the company seems to have a strong and stable short-term situation, with a high current ratio and reasonable rates in terms of profit margins and contribution margins. In my opinion, these numbers create the premises for a successful subsequent development of the business, given the fact that accessibility to financial resources is much higher.

On the other hand, the company has some significant problems and weaknesses in terms of inventory and plant utilization. To these I would add the fact that its cheapest product has the highest sales figures, which may come to show that the company prefers products that are cheaper to produce, but of a lesser quality.

In terms of inventory, as I have previously stated, the company has an overall turnover value of over 11, which may come to show that the levels of sales are much higher than the inventory and that it is likely it will not cope with the overall net sales.

Having a look at each product of the portfolio in part, it is obvious why this is so. One of the products here, Dell, has the highest unit sales figures and the lowest unit inventory numbers. Additionally, the plant utilization.....

Have Any Questions? Our Expert Writers Can Answer!

Need Help Writing Your Essay?