Decisions taken before first Rollover

Team Name: VELO

Team Members:
1.
2.
3.
4.
5.
6.

Sunil Kumar Bishnoi

Amit Raghuwanshi
Nishant
Anjali
Pramod Singh Lodhi
Sachin Chauhan

Date of Submission: 01/09/2014

Marketing Decisions
Under Products Decisions Tab:
Already Available product is Adv1

Retail Price increased from $1,600 in previous period to $1,900 so as to increase the profit
margin.
Planned production increased to 24,000 units in the current year, with a planned safety
stock of 5 weeks which was earlier 4 weeks.
Advertising expenditure for various mediums:
A) TV increased to $
B) Internet increased to $
C) Magazines increased to $
Reason for increasing the advertising expenditure according to market segment scenario
information, proportion of TV to Internet to Magazine in Adventure segment is 40% , 30%
and 50% respectively. Therefore company has decided to increase the advertisement
expenditure accordingly. Also to sell a $1,900 cycle in the competitive market there need to
be a heavy stress on advertising, PR and Branding.

Public relations expenditure for various mediums

A) TV increased to $
B) Internet increased to $
C) Magazines increased to $

Under Distribution Decision Tab:

The company has revised the retail margin and extra support that we previously provided to the
different distributors.

Bike Shops: Current Distributors is 34, since under the adventure segment the bike shops sell about
40% of the product, in order to encourage them the extra support is increased from $100,000 to
$300,000. Also to increase the profit the retail margin is decreased to 40%.
Sports Stores: Current distributors are 74, and as they are responsible for 50% of sales of product
under Adventure segment, Although retail margin is reduced to 42% but extra support is increased to
$400,000.
Department Stores: As they condtibute to only 10% of sales under this segment, the retail margin is
reduced to 35% but the extra support is increased to $300,00 .

Under Branding Decisions:

Brand Advertising cost to the company has been increased drastically from $100,000 to $1,000,000 so
as to create an awareness among the audience and this will help in the future prospects of the
company.

OPERTATION DECISIONS
Manufacturing decisions:
Workforce increased by 20 keeping in mind the future requirements and an increase in the production
capacity of the factory.
Current plant size is also increased by purchasing 5,000SCU more.
Batch size increased from 200 to 260 so as to properly utilise the workforce with minimum labour
requirement.
Set up time is reduced by investing more in the set up time reduction increasing to $1,000,000 in the
current year. Current setup is 11.4% in order to reduce it more has been invested.
For supplier relations also the amount allocated is increased to $100,000.
Raw material inventory is increased from 2 weeks to 4 weeks. As the raw materials are exhausted
and 2 weeks is very less. And this in turn effects the production which stands at only 67.3%. therefore
the inventory has been increased for a 4 weeks backup.
Regarding the quality decisions, Average salary of the workers has been increased from $22,000 to
$23,500.
Training hours remains the same and no change has been done in the duration.
Preventive maintenance has been increased to $1,000,000.
Quality systems technology has been increased to $1,000,000.
Preventive maintenance and quality system investments are made keeping in mind the current
breakdown s and reworks. In order to decrease the breakdowns more investment is required on the
quality systems and preventive maintenance.

FINANCE DECISIONS
No major financial decision are taken for the year other than repaying of debt. As the cash in hand
with the company is enough to sustain, the long term debt on the company were repaid.
Also investor relations amount was increased from $300,000 in previous term to $400,000 for the
current.

DESIGN and DEVELOPMENT DECISION

A new product was designed for Kids Segment named Velo_K1 this product will be launched in the
next year.
Design/Style: 76
Technical Specs: 10
Target Prime cost per unit is $58.