Simulation, a Very Powerful Computer-Based

¶ … simulation, a very powerful computer-based decision support system has rapidly gained acceptance as a decision-making tool in business (Wynn et al.,2007). The main applications of simulation in business processes is for the improvement of operating and operational efficiency (Watkins & Hill,2009). The basic idea behind simulation is to accurately model a given physical process on the computer by incorporating the various uncertainties that are usually inherently present in all the real and actual systems. In this paper, we discuss how simulation can be used in judging the pricing as well as R & D. allocation of three different products in an effort of formulating a better product marketing strategy that would see the company, Clipboard Tablet Co, maximize profit from its sales operations.

How the simulation was carried out

In this paper, we conduct a simulation of the sales and performance of three different products over 6-year period. This is done using the outcomes of Forio Simulate (Forio,2012), a first-class simulation software.The pricing, R&D allocation and the decision to discontinue a given product is what is determined at the beginning of every year.

Summary of the Decisions after the time wrap

1/2/2012 input decisions for 2012

The performance of the 3 products also indicates a periodic variation over the 5 years. A cumulative review of the same products indicates that the best performing products over the 5-year period are -X5 and the product -X6 while the worst performing one is the product -X7. This is shown in the Figure. 2 below. If taken back to the year 2012, it would be prudent to make efforts in improving the performance and product attributes of the product X7.This would ensure that no losses are suffered in the R&D, production, marketing and ultimate sale of the same product. In regard to pricing and R&D allocations. If any product is to be discontinued, then it is X7 due to its dismal performance.

Figure 1.Profitability of the products in 2012

Decision

The customers would pay more for the product X6 than for the rest of the products in the same category. The X6 sales are noted to be in the growth phase of the product lifecycle. The performance of the product X6 compares well with the rest of the products in the same category.

The Financial review of the three products

1/2/2013 input decisions for 2013

The performance of the 3 products still indicates a periodic variation over the 5 years. The customers would pay more for the product X7 than for the rest of the products in the same category. The X7 sales are noted to be in the growth phase of the product lifecycle. The X5 is noted to be is lower quality as well as performance than the rest of the products. The product to be discontinued is however X6 due to its low ROI.

1/2/2014 input decisions for 2014

The performance of the 3 products still indicates a periodic variation over the 5 years. The customers would pay more for the product X7 than for the rest of the products in the same category. The X7 sales are noted to be in the growth phase of the product lifecycle. The X5 is noted to be is lower quality as well as performance than the rest of the products. The product to be discontinued is therefore X5 to its low profitability and ROI.

1/2/2015 input decisions for 2015

The performance of the 3 products still indicates a periodic variation over the 5 years. The customers would pay almost the same price for all the competing products in the same categories. The X6 tablet has fewer features in comparison with X5 and X7. There should be an increase in the R&D allocations for X6 in order in increase its features. The products to be discontinued in X5 and X6 due to their ever reducing level of profitability (signaling continued future losses).

A review of the sales levels of the products over the years

X5

Sales

The sales of the product X5 saw a considerable variation over the 5 years. The sales would continuously increase to 2145622 and then see a sudden reduction to 614026. This reduction in the sales figures can be attributed to the various changes in market saturation over the last years.