Round 2 Notes

The team decided against making any improvements to products Able and Acre during this round. These products are already performing better than the customer requirements, and the team aims to avoid unnecessary expenditures while the products are within the "ideal range."
The primary goal for revisions was to prevent the revision date from falling too late in the year. A major competitive advantage was identified: competitors often delay their products until late in the year (e.g., June or November), whereas the team is targeting a March or April revision date.
Specific product revisions for high-end, performance, and size segments:
- Adam: Performance set at $8.6$ , Size set at $11.3$ , and MTBF (Mean Time Before Failure) at $24,000$ .
- Aft: Performance set at $9.9$ , Size set at $15.3$ , and MTBF at $27,000$ .
- Agate: Performance set at $4.3$ , Size set at $10.2$ , and MTBF at $20,000$ .
The Balanced Scorecard rating was measured at $70.3$ following the latest R&D and marketing draft changes.

Pricing Adjustments:
- Able: Price lowered by $\$0.50$ to $\$27.99$ . Competitor Dell sold more units at a price of $\$27.50$ , so the team aims to remain competitive as prices drop by $\$0.50$ each round.
- Acre (Low-end segment): Price lowered to $\$19.49$ to leverage a "psychological aspect" (being under the $\$19.50$ threshold). This is critical as price accounts for over $50\%$ of customer importance in this segment. The material cost for Acre is approximately $\$7.06$ .
- Aft: Price adjusted to $\$33.79$ (revised from $\$33.75$ ) to compete with competitor Foam, who priced at $\$33.00$ .
Promotion and Awareness Budget:
- Customer awareness decreases by $33\%$ each round. The team identified that $\$1,400,000$ is the required maintenance spend to keep awareness at a " $5$ out of $5$ " rating once $100\%$ is reached.
- Target spends for the current round:
  - Most products: $\$1,800,000$ to reach $90\% - 100\%$ awareness.
  - Aft: $\$2,000,000$ , as current awareness is lower at $66\%$ .
Sales and Accessibility Budget:
- Accessibility is viewed as a long-term build that takes multiple rounds to increase.
- Adam: $\$2,900,000$ (current accessibility at $61\%$ ).
- Aft: $\$3,000,000$ (accessibility is currently low).
- Other products range between $\$2,500,000$ and $\$2,800,000$ based on current accessibility metrics (e.g., Able at $71\%$ ).

The team reflected on significant stock-outs in the previous round, specifically for Able, Aft, and Acre. The stock-out in Acre resulted in a loss of over $\$8,000,000$ in potential sales.
Sales Forecasts:
- Able: $1,894$ units.
- Acre: $2,705$ units (targeted for high growth due to last round's stock-out).
- Aft: $800$ units.
- Agate: $650$ units.
Production Buffers:
- For Able and Acre, the team is producing a buffer of $15\%$ over the forecast.
- For Adam, Aft, and Agate, a buffer of $10\%$ was chosen.
- Total Production Units:
  - Able: $2,185$ units.
  - Acre: $3,100$ to $3,150$ units (the team noted they have a total capacity of $3,400$ units, representing $200\%$ of first-shift capacity).
  - Adam and Aft: Approximately $825$ units each.
  - Agate: $650$ units.
Capacity and Automation:
- Acre: Added $500$ units of capacity.
- Automation: Increased automation by $0.5$ for both Able and Acre. Automation is prioritized for these price-sensitive products to lower labor costs per unit. Higher-end products will remain less automated to allow for more "hands-on" production.

Human Resources (HR):
- A goal was set to achieve a perfect score ( $14$ out of $14$ points) in the HR category.
- Recruitment Spend: Finalized at $\$3,000$ per new employee (investing in higher quality hires to reduce long-term labor costs).
- Training Hours: Set at $60$ or $80$ hours to maximize productivity and lower labor costs.
Finance:
- Long-Term Debt: The team decided to max out long-term debt to create a significant cash cushion and avoid the risk of an emergency loan.
- Stock: The team decided not to issue new stock this round ( $0$ issued) to avoid diluting the current stock price ( $\$8.40$ ).
- Cash Position: The team aimed to end the round with a healthy cash buffer, noting that previous rounds saw competitors take emergency loans due to over-investment and low sales.