ASSIGNMENT. ISEN4821. S-Curve for forecasting.
The XYZ company introduced the new technology (currently advertised as U-
VERSE) in mid- 2010. At the time, the company estimated that their new
technology will have a long-term market share of 70% (i.e. M=70%).
According to the company’s records, by January 1st, 2011, its market share
had reached 5% of its peak, and it reached to 45% of its peak by April first
2013. The company’s long-term technology plan calls for starting R&D
activities for new technology 2 years before the current technology reaches
its peak (or within 1% of its peak).
PART I: Determine
1)- The calendar year (call this X) the company’s market share will reach its
expected peak, and the year R&D activities for the next technology
should start
2)- Use a time unit of 1 quarter (0.25 year), calculate the market share for
each period, from 2013 to year X+2, and graph the corresponding S-
Curve.
PART II:
When the technology was introduced, using historical data for similar
products, it was determined that:
A)- Demand for the product in year T will increase for some time in the
future and could be estimated using the following equation.
Yearly demand in million units, D(t) = 0.85*(T-2010) 2
+0.5
B)-The company will realize a long-term average revenue of $120 per unit.
C)- Total Cost of R&D activities, promoting the technology, introduction and
other expenses, will be decided from the following equation Total costs in million-dollar, TC = 180+50*(T-2010.5) +0.8
Using the information provided, determine
1)- How long will it take the company to recover its investment and start
generating profit. (This is called Break-Even -Point)
2)- Suppose at the end of year 2017, the company sales the technology for
$400 Mil. to a competitor, Generate profit or loss for the company from
the year 2013 to the end of 2017. What was the net financial outcome of
the technology?
Assignment help: General methodology
In this type of forecasting assignment, you need to proceed as follows
1)- determine α and To from the data for initial n quarts provided. Note that unit of time is always a quarte
2)- start spreadsheet with first column as the time. Start this column with first
quarter you have data for or To, whichever is smaller
3)- In the next column generate the market share using the equation 1 (see the
tutorial on S-curve Forecasting)
4)- in the next few columns generate D(t) and TC based on column 1 data.
5) For each quarter (or t value):
Revenue= (Market share) x (Total demand) x (price per unit)
Total cost. Calculated from TC equation
Profit = Revenue -cost
Others: Need to extract from the output data
Note: When the calculated market share gets close to M, the output will get
closer to M (in very small increments) but will never assume a value =M. So
as soon as the calculated market shar get within 0.25 points of M, you should
stop the simulation.
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