Use the average forecast spreadsheet presented in the class as your starting point. >> The unit sales is the average demand between several forecasting methodologies. >> The best-case demand scenario is 30% higher. The worst-case scenario is 30% lower. >> The company starts the supply chain orders based on the average.

The company can reduce the unit cost to $10 from day one if it will purchase 150,000 units on month-3 and continue to purchase 50,000 per month there after. Modify the spreadsheet for this scenario (using the average market demand numbers). What will be the financial impact of such decision?

month -3 month -2 month -1 month 1 month 2 month 3 month 4 month 5 unit sales 0 0 0 1,000 10,000 30,000 50,000 50,000 revenue 0 0 0 25,000.00 250,000.00 750,000.00 1,250,000.00 1,250,000.00 manufacturing units 1,000 10,000 30,000 50,000 50,000 50,000 50,000 50,000 unit cost 10 10 10 10 10 10 10 10 manufacturing cost 10,000.00 100,000.00 300,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 monthly P&L -300,000.00 -475,000.00 750,000.00 -10,000.00 -10,000.00 -100,000.00 -110,000.00 -250,000.00 -1,135,000.00 250,000.00 -885,000.00 750,000.00 -135,000.00 cum cash balance -410,000.00 -885,000.00 615,000.00 month -3 month -2 month -1 month 1 month 2 month 3 month 4 month 5 unit sales 0 0 0 1,000 10,000 30,000 50,000 50,000 revenue 0 0 0 25,000.00 250,000.00 750,000.00 1,250,000.00 1,250,000.00 manufacturing units 1,000 10,000 30,000 50,000 50,000 50,000 50,000 50,000 unit cost 10 10 10 10 10 10 10 10 manufacturing cost 10,000.00 100,000.00 300,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 monthly P&L -300,000.00 -475,000.00 750,000.00 -10,000.00 -10,000.00 -100,000.00 -110,000.00 -250,000.00 -1,135,000.00 250,000.00 -885,000.00 750,000.00 -135,000.00 cum cash balance -410,000.00 -885,000.00 615,000.00