B201 Capsim Exam 1

What is the absolute max percentage of capacity you can achieve with plant utilization?

200%

What are the five segments in Capsim?

1. Traditional

2. Low-End

3. High-End

4. Performance

5. Size

What is the max you should spend on a segment’s Sales Budget to avoid diminishing returns?

$3,000,000

What is the most direct way to decrease material costs?

Decrease performance or MTBF

Does the courier show you what other companies spent on promo and sales for their products?

No

Which segments product should you refrain from repositioning for the first few rounds?

Low-end

What’s the single most important buying criteria for low-end customers?

Price

Which 2 market segments are least sensitive to price?

High-end & size

What does investment in promotion budgets help to increase?

Customer Awareness

How do you decrease your products age?

Change the position on R&D (halves it)

How do you increase your products age?

Do nothing

Does budget, promotion, or sales affect the product segment as a whole instead of individual products?

Sales

How much and in which direction do price expectations change each round?

$.50 cheaper

Do all segments grow at the same rate?

No

Should you aim to have zero inventory left over at the end of the year?

No

What is the customer survey forecasting formula?

Product CSS Score / Total CSS Score

How many years do you have before you must pay off long-term debt?

10 years

How does increasing the accounts payable time impact your company’s finances?

More time to pay your debts on account & Free Cash

What percentage of awareness and accessibility do you lose each round?

A third

If you buy capacity is it available immediately or do you have to wait a year?

Wait a year

What’s a good amount of cash to have on hand at the end of each round?

Enough to not have an emergency loan

How do you achieve an ideal age of 0 for a high-end product?

Change the product every year

In the performance segment, what is the most important criteria for customers when making a purchase?

Reliability (MTBF)

Can you make 2 different products on the same assembly line?

No

What is the relationship between automation and labor costs?

Increase automation decreases labor costs

When you have current debt on your balance sheet, how many years do you have before you must pay it back?

1 year

What is one decision that directly impacts stock prices in Capsim?

Issue Stock

What is the relationship between accounts receivable policy and customer survey score?

Shorter A/R lowers Survey Score

Your company’s days of working capital (current assets - current liabilities) should be in what range?

30-90 days

When you create a new product in R&D, what must you do in production so that you can sell it after the following year?

Buy Capacity/Automation the year before launch

Which criteria are used to describe the ideal spot for each product?

Position (reliability & size)

Which product attribute is a measure of reliability?

MTBF

Which product criteria is most important to traditional segment customers?

Age

Which segment grows faster, traditional or high end?

High End

Which segment is larger at the start of the simulation, traditional or high end?

Traditional

T or F: Automation is a measure of the number of assembly lines in your plant

False

If a Capsim team’s asset turnover is low, what does this imply about its use of its production capacity?

Inefficient

What is one way to increase a products contribution margin?

Increase Sales/Raise Price

In terms of units sold, which is the largest Capsim market segment?

Low End

In production, is it best to order exactly the number of units forecasted to sell, a few more, or a few less?

A few more than the forecasted sales

T or F: the ideal spot for each segment is in the center of its circle on the perceptual map?

False ( best in the blue circle)

Which company is more efficient, the one with a 5% ROA or the one with a 7% ROA

7%

Which is better in Capsim, to stock out of a product or to have about one month’s worth of inventory left at the end of the year?

One month

Is product accessibility related to a product’s distribution channel or its price point?

Distribution Channel

Decisions in which Capsim function directly affect product awareness?

Promo Budget

Which is more expensive, taking out current debt or incurring an emergency loan?

Incurring an emergency loan

Give an example of an information flow in Capsim, where information entered on one page flows to another page

The marketing forecast flows into production

If you make R&D changes that will take longer than one year to complete, can you scale them back the following year to get the updated product out sooner?

No, it’s locked until its complete

Does the courier tell you what your competito’s automation levels will be next round?

No

Does the courier tell you what your competitor’s capacity will be next round?

No

T or F: If you change your forecasts then your pro forma income statement will change

True

What are the 2 metrics in the courier you use for the basic forecasting method?

Units Sold & Demand Growth Rate

Which of these metrics are used in forecasting: contribution margin or december customer survey score?

December Customer Survey Score

The courier is published on December 31 of each calendar year. Do the customer buying criteria in each segment analysis describe what the customers wanted in the year ending 12/31 or what they will want in the new year beginning 1/1?

Year ending 12/31

Each year customers expect a peoduct’s size to be larger, smaller, or stay the same?

Smaller

Each year customers expect a product’s performance to be better and faster, worse and slower, or stay the same?

Better & Faster

What are the two product attributes that make up its ideal position on the perceptual map?

Size & Performance/Reliability

T or F: All market segments in Capsim drift across the perceptual map at the same rate

False

T or F: Perceptual map drift rates are made available to students in the Capsim published materials

True

Do customers preferences for the MTBF change over the 8 rounds?

Yes

Will a segment’s customers ever buy a product outside the dashed circle on the perceptual map

no

Will increasing MTBF above the customer’s expected range make that product more attractive to customers?

No

T or F: your accounts receivable terms are a factor in your customer survey score

True

Will a segment’s customers ever buy a product that is $1.00 above the price range in the Courier?

Yes, but loses 20% of customer survey score

What is the relationship between a product’s position on the perceptual map and its material costs?

Higher position (performance) = Higher cost

T or F: the more products your company repositions in a year, the longer those projects will take to complete

True

What is the relationship between repositioning a product and the product’s perceived age?

Decreases age by half

T or F: about 1/3 of your customers forget about your product’s each year, and you must continually promote them to maintain awareness

True

Which marketing expenditure benefits all your products in a segment, promotion or sales?

Promotion

T or F: Sales budgets have a smaller effect on products outside the fine cut circle

True

What does it mean when your actual sales are greater than your potential sales?

Competitors underproduced

What does it mean when your potential sales are greater than your actual sales?

Stocked Out

What is the highest level of automation avaible in Capsim?

10

When a bond comes due, the face value of the bond will be subtracted from long term debt and added where?

Current debt

T or F: a brokerage fee is charged when you repay a bond early

True

Can you retire stock (buy back shares) in Capsim?

Yes

Can you create a new product in capsim?

Yes

Can you discontunue a product in Capsim?

Yes

Where do you find the contribution margin for each individual product you sell?

Income Statement

Can you sell capacity to raise money?

Yes

Is adding a second shift to your production an efficient way to produce products?

Yes, but not cost efficient bc 50% more labor costs

Should you try to avoid borrowing money in Capsim?

No, debt is normal

Which capsim function controls automation?

Production

Where can you find the revision date for a product you have updates?

Production Analysis Page (Courier)