Production Simulation

The production simulation allows you to see how your demand estimates and production decisions will affect your production operations and your production costs. It will also allow you to project your pro$-$forma financial statements.

You will discover that your production costs are high relative to your selling price. This is because your production volume is low due to the fact that you are in the early stages of the product life cycle. As your demand increases, your production costs per unit will decline.

YOUR TASK

In the Workspace, load all of the estimates and decisions that you have made so far. These will include the average price of each brand $($imported from your Pricing decision$),$ your worker productivity $($from Human Resources$),$ your demand estimates $($from Sales$),$ and your production decisions.

Next, calculate your demand fulfillment, projected production costs, and capacity utilization.

Observe your unit production costs and compare them to your selling price. Also, note the number of stock outs or the amount of excess capacity your operation is likely to experience.