Model based simulation Download Plannerslab http://www.plannerslab.com/, a free software tool for model based decision making, and watch this video...

Model based simulation

Download Plannerslab http://www.plannerslab.com/, a free software tool for model based decision making, and watch this video tutorial.

Then perform this exercise, which originates from TUN

Exercise:

The new company car fleet A new company has a budget to purchase as many new cars as possible for the new car fleet for the next four years

o The cost for the car is (vcost per car): $14,000

o There is a fixed cost for the car fleet of $20,000 each year (admin overhead)

o The expected sale units are 25 cars for the first year, and expected to grow 1.06 each year

o The sale price is $20,000 for the two years and then $25,000 for the third year and $28,000 for the last year.

Since some of you are not business majors, so here is the basic formula you need:

Profit = revenue (price per car multiplied by units sold) minus total cost (fixed cost plus (variable cost multiplied by units sold)).

Build a plannerslab model which can help the company to make decisions and answer the following questions:

1. What is the profit for each year?

2. How many cars should the company sell the first year to reach a total cost (fixed cost+vcost) equals to 200000 ?

--> you can use the feature in PlannerLab by to set total cost = 20,000 and see how the other variables change

3. Calculate the sale price to reach the breakeven point for the first year

--> breakeven point means that there is zero profit, or in other words revenue equals total cost

4. What if the sales prices are 10% less in the second year and 15% less in the third year?

5. Contemplate and comment how difficult it will be to build a model in a real world scenario?

Take screenshots to document your answers 1-4