Capsim Case Study Answers

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Introduction: This menu consist 20 Dogs, 5 Puzzles, 10 Plows, and only 2 Stars for a total of 37 different brands of Rum. For Rum itself the Total Standard cost is of $4,492 while the Total Actual Cost is $5,952. The Total Standard Revenue is of $16,703 and the Total Actual Revenue is of $12,946. The Profit Factor of Rum is of .42 and the Standard Total CM is $4,453.77, Rum has an initial category of PLOW. My primary objective for this project is to increase the Category CM &Profit Factor of Rum, and try to change its category from PLOW to Star. I will try to decrease the Variance between Actual and Potential Drinks, the Variance in Average portion size, and decrease the Oz. usage while also decrease the Revenue from Rum brands. For this Project I will present two different exhibits from each strategy. In the first Exhibit I will show the Menu with the Brand Items (Brand items will be highlighted) that I will modify and in the second Exhibit I will show the menu after the changes that I implemented. …show more content…

Strategy #1. The first strategy that I will implement on the Rum menu is to eliminate all Dogs from the menu. I will determine which Dogs will be delated by two different factors. The first factor will be based on Profit Factor. For this strategy I will find the Average Profit Factor of all Dogs (which is .04) and delate any Dog that has a lower Profit Factor than the Average Profit Factor. Initially I will be below my number of drinks sold by 201. II. Because there are some Dogs that didn’t sold any drinks during the last months, I will use a different method of determining which Dogs (that didn’t recorded any sell) will be taken out of the menu. The second method will be based on the minimum number of drinks that each brand needs to sell in order to achieve a Profit Factor of at least .04, the minimum number of drinks that I will use for this method will be

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