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Task 1 Jct2 Supply Chain

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Supply Chain Task 1
B.1 Pro-Forma and Budget
Quarter 1 marked the launch of NeoTech. Two million dollars in capital was raised by selling company stock. This capital was used for the initial cost of the launch. Unlike later in the simulation, budget decisions in the first quarter were much easier to manage because costs were fixed, and the revenue guaranteed. Just over half million dollars was spent to open the first office and complete research and development. I determined the direction of NeoTech would be to focus on producing a high end computer as its marquee product and a mid-range/office computer as a secondary focus.
Quarter 2 marked the first quarter where a product was produced, salesmen hired, and product sold. The most difficult decision in this quarter was finding the proper equilibrium between projecting sales of a new and unknown commodity, choosing the right amount of sales people and their compensation, and determining a competitive yet profitable price.
Summarizing the decisions made in quarter 2, a total of 9 salesmen were hired at 55k annual salary. It was estimated that each salesman would sell at minimum 100 computers. The high end computer, “Engineo” was priced at $3799.00 with a $300 rebate. The “Neoffice” was priced at $2,000.00 with a $100 rebate. The cost per unit of the engine and Neoffice were $2,146 and $1,794 respectively. Based on the cost per unit and the predicted sales per salesman, NeoTech directed the production of 600 Engineo computers and 300 Neoffice.
Analyzing the second quarter, the pro forma net cash flow would only be $28,120. Profits in this quarter were sacrificed in order to gain advantage in the market by having a low price and great value. Also rebates were offered, enticing buyers to buy quickly. However if the product is received well, and creates demand, then subsequent quarters should have a much

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