While you can calculate the demand for Round 1 from the information on hand, fut

ID: 399431 • Letter: W

Question

While you can calculate the demand for Round 1 from the information on hand, future growth rates are unknown. Can you predict the market size for Rounds 2 to 8? No. On the other hand, you need something for planning purposes to address critical questions like:

How much production capacity will we need in the future?
How much money do we need to raise?
Which segments are most attractive for investment?

Planners address this type of issue with scenarios. Typically there are three: worst case, average case, and best case. The average case assumes that the current growth continues indefinitely into the future.

Worst case assumes a lower growth rate. Best case a higher growth rate. The truth will unfold as the simulation progresses. Next year's growth rate is published in the Courier on each Segment page in the Statistics Box.

Demand Analysis it Calculating Market Demand The Industry Demand Analysis will help the Marketing and Production Departments understand future demand. Marketing can use the total demand for each segment as it creates a sales forecast. Production can use the results when making capacity buy and sell decisions. You will need: . The Segment Analysis reports (pages 5-9) of the Capstone Courier for Round o The Industry Conditions Report At the top of each Segment Analysis page you will find each segment's statistics (see example below). The top line is the total demand for the segment for last year (the Courier reports last years data). The fourth line tells you next years growth rate for the segment To find out the coming years total demand, simply apply the growth rate to last years total demand For example, in the High End segment analysis on the left, Total Demand is 2554 and next years growth rate is 16.2% Next years demand is calculated as follows: High End Segment Analysis es coul High End Statistics Total Industry Unit Demand Actual Industry Unit Sales Segment % of Total Industry 2,554 2,554 112% Total demand 2554 Growth (Total Demand x 16.2%) 414 Rate 162% The above growth and demand figures are for example only. Your industry growth rates and demand may differ, but the process to calculate next years total segment demand is identical Total Segment Demand next year (rounded to nearest whole number) 2968 Industry Demand Activity For your purposes, complete the form below with the·average. scenario. Assume the Round 1 growth rates will continue into the future ncra ed. This willive you some de for potential market size you have time try a worst case and best case scenaro for Ronds 2 throuh

Explanation / Answer

As the details are given here for only one kind of product which is High end product, solution here is related to high end product only.

Demand at the end of round 1: 2554

Three scenario against which demand is to be created are Average, best & worst scenario

Considering the growth percentage as stated in all of these three scenario, which are

Average scenario: 16.20%

Best scenario: 1.5 times of growth rate which means 1.5*16.20% = 24.3%

Worst scenario: 0.5 times of growth rate which means 0.5*16.20% = 8.10%

Therefore

Using these scenario following will be the expected demand in all three scenario as required for High end product.

Average

Best case

Worst case

Round 2

2554+(2554*16.2%)=2968

2554+(2554*24.3%)=3175

2554+(2554*8.10%)=2761

Round 3

2968+(2968*16.2%)=3449

3175+(3175*24.3%)=3946

2761+(2761*8.10%)=2985

Round 4

3449+(3449*16.2%)=4008

3946+(3946*24.3%)=4905

2985+(2985*8.10%)=3226

Round 5

4008+(4008*16.2%)=4657

4905+(4905*24.3%)=6097

3226+(3226*8.10%)=3488

Round 6

4658+(4657*16.2%)=5411

6097+(6097*24.3%)=7578

3488+(3488*8.10%)=3770

Round 7

5411+(5411*16.2%)=6288

7578+(7578*24.3%)=9420

3770+(3770*8.10%)=4075

Round 8

6288+(6288*16.2%)=7306

9420+(9420*24.3%)=11709

4075+(4075*8.10%)=4406

Data not available

As data here is provided only for one segment (i.e.; High end) therefore the same cannot be answered