Retirement Planning Prototype

Last salary
Initial post-retirement income
Year assets = 0
Model

2500

266
133
85

2000
1500
1000
500

57

55

53

51

49

0
47

167
116
10%
5%
2%
9%
5%
65
50%
30%
30

Assets

Parameters
Initial assets
Salary
Savings rate
Salary growth
Inflation
Investment return pre-retire
Investment return post-retire
Retire date
Post-retirement withdrawal rate
Post-retirement tax rate
SS Income at retirement

-500
-1000
-1500

Retirement
Post-retirement SS
Age Salary
Contributions Needs
Income
47
116
23
0
0
48
122
24
0
0
49
128
26
0
0
50
134
27
0
0
51
141
28
0
0
52
148
30
0
0
53
155
31
0
0
54
163
33
0
0
55
171
34
0
0
56
180
36
0
0
57
189
38
0
0
58
198
40
0
0
59
208
42
0
0
60
219
44
0
0
61
230
46
0
0
62
241
48
0
0
63
253
51
0
0
64
266
53
0
0
65
0
0
133
30
66
0
0
136
31
67
0
0
138
31
68
0
0
141
32
69
0
0
144
32
70
0
0
147
33
71
0
0
150
34
72
0
0
153
34
73
0
0
156
35
74
0
0
159
36
75
0
0
162
37
76
0
0
165
37
77
0
0
169
38

78
79
80
81
82
83
84
85
86
87
88
89
90

0
0
0
0
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0
0
0
0
0
0

172
175
179
182
186
190
194
198
201
206
210
214
218

39
40
40
41
42
43
44
45
45
46
47
48
49

89

87

85

83

81

79

77

75

73

71

69

67

65

63

61

57

59

Age

Post-retirement Retirement
Taxes
Assets
0
167
0
205
0
248
0
296
0
349
0
409
0
476
0
549
0
632
0
723
0
824
0
936
0
1059
0
1196
0
1348
0
1515
0
1700
0
1903
31
1999
31
1965
32
1926
33
1883
33
1836
34
1783
35
1724
35
1659
36
1589
37
1511
38
1427
38
1335
39
1236

Year Assets = 0
85
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77

40
41
42
42
43
44
45
46
47
48
49
50
51

1128
1011
885
749
603
446
277
96
-98
-306
-528
-766
-1019

0
0
0
0
0
0
0
0
1
1
1
1
1

0
0
0
0
0
0
0
0
1
0
0
0
0

78
79
80
81
82
83
84
85
86
87
88
89
90

Draft TV Commercials
Parameters
Budget
Ad Cost
SD Impress
SD Reliability
Drafts

100
5
50
0.01
1

31

31
142

31
142
13

31
142
13
46

31
142
13
46
159

31
142
13
46
159
43

31
142
13
46
159
43
54

0.00

0.00
-0.01

0.00
-0.01
0.01

0.00
-0.01
0.01
0.00

0.00
-0.01
0.01
0.00
0.00

0.00
-0.01
0.01
0.00
0.00
0.00

0.00
-0.01
0.01
0.00
0.00
0.00
0.00

Apparent
Impressions
per dollar

31

31
140

31
140
13

31
140
13
46

31
140
13
46
158

31
140
13
46
158
43

31
140
13
46
158
43
54

True Best

31

142

142

142

159

159

159

Apparent Best

31

140

140

140

158

158

158

True Impressions
per dollar

Reliability (%)

True Retained
Impressions
Apparent Retained
Impressions

2984
12755
12047
11338
11919
11125
10330
#NAME? #NAME? #NAME? #NAME? #NAME? #NAME? #NAME?
2976
12625
11924
11222
11874
11082
10291
#NAME? #NAME? #NAME? #NAME? #NAME? #NAME? #NAME?

8
31
72
13
46
159
43
54
31
0.00
-0.01
0.01
0.00
0.00
0.00
0.00
0.01

31
71
13
46
158
43
54
31
159
158

9536
#NAME?
9499
#NAME?

Icebergs for Kuwait

Cost
Rental
Fuel
Total

Parameters:
Speed
Volume
Day
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43

5
10,000,000

Distance Melting
0
120
240
360
480
600
720
840
960
1080
1200
1320
1440
1560
1680
1800
1920
2040
2160
2280
2400
2520
2640
2760
2880
3000
3120
3240
3360
3480
3600
3720
3840
3960
4080
4200
4320
4440
4560
4680
4800
4920
5040

0.00
0.01
0.02
0.04
0.05
0.06
0.07
0.08
0.10
0.11
0.12
0.13
0.14
0.16
0.17
0.18
0.19
0.20
0.22
0.23
0.24
0.25
0.26
0.28
0.29
0.30
0.31
0.32
0.34
0.35
0.36
0.37
0.38
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40

Revenue
Profit

Radius
Volume Fuel Cost
133.65 10000000 2318.40
133.65 10000000 2318.40
133.64 9997307 2318.36
133.61 9991921 2318.28
133.58 9983847 2318.17
133.53 9973088 2318.01
133.47 9959650 2317.82
133.40 9943541 2317.59
133.31 9924769 2317.31
133.22 9903344 2317.00
133.11 9879277 2316.65
132.99 9852583 2316.26
132.86 9823274 2315.84
132.71 9791368 2315.37
132.56 9756880 2314.86
132.39 9719831 2314.31
132.21 9680239 2313.73
132.02 9638126 2313.10
131.81 9593516 2312.43
131.60 9546431 2311.72
131.37 9496898 2310.98
131.13 9444944 2310.19
130.88 9390596 2309.36
130.61 9333884 2308.48
130.34 9274839 2307.57
130.05 9213493 2306.62
129.75 9149879 2305.62
129.44 9084032 2304.58
129.11 9015987 2303.50
128.78 8945782 2302.38
128.43 8873455 2301.21
128.07 8799045 2300.00
127.70 8722593 2298.74
127.31 8644141 2297.44
126.92 8563731 2296.10
126.52 8483017 2294.74
126.12 8402811 2293.37
125.72 8323113 2292.00
125.32 8243920 2290.62
124.92 8165231 2289.24
124.52 8087045 2287.86
124.12 8009359 2286.47
123.72 7932172 2285.08

64,000
184,959
248,959
455,007
206,048

44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81

5160
5280
5400
5520
5640
5760
5880
6000
6120
6240
6360
6480
6600
6720
6840
6960
7080
7200
7320
7440
7560
7680
7800
7920
8040
8160
8280
8400
8520
8640
8760
8880
9000
9120
9240
9360
9480
9600

0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40

123.32
122.92
122.52
122.12
121.72
121.32
120.92
120.52
120.12
119.72
119.32
118.92
118.52
118.12
117.72
117.32
116.92
116.52
116.12
115.72
115.32
114.92
114.52
114.12
113.72
113.32
112.92
112.52
112.12
111.72
111.32
110.92
110.52
110.12
109.72
109.32
108.92
108.52

7855483
7779290
7703591
7628385
7553669
7479444
7405706
7332454
7259687
7187403
7115600
7044278
6973433
6903065
6833172
6763752
6694804
6626327
6558317
6490775
6423698
6357085
6290934
6225243
6160012
6095237
6030919
5967054
5903642
5840681
5778168
5716104
5654486
5593312
5532580
5472291
5412440
5353028

2283.68
2282.28
2280.87
2279.46
2278.05
2276.63
2275.20
2273.77
2272.34
2270.90
2269.45
2268.00
2266.55
2265.09
2263.63
2262.16
2260.68
2259.21
2257.72
2256.23
2254.74
2253.24
2251.73
2250.22
2248.71
2247.19
2245.66
2244.13
2242.59
2241.05
2239.50
2237.95
2236.39
2234.83
2233.26
2231.68
2230.10
2228.51

Racquetball
Parameters
variable costs
initial players
players growth
Woodrow price
our price
balls/buyer
plant cost
share a
share b
discount rate

Time

0.33
1.2
0.05
1.25
1.00
10
5
5.4
12.3
0.1

Players
1
2
3
4
5
6
7
8
9
10

1.20
1.26
1.32
1.39
1.46
1.53
1.61
1.69
1.77
1.86
NPV (millions)

dollars
millions
%/yr
dollars
dollars
millions

Woodrow Our
Price
Our
Our
Demand/
Price
Price
Ratio
Share
Buyers
Buyer
1.25
1.00
1.25
0.21
0.26
10.00
1.25
1.00
1.25
0.21
0.27
10.00
1.25
1.00
1.25
0.21
0.28
10.00
1.25
1.00
1.25
0.21
0.30
10.00
1.25
1.00
1.25
0.21
0.31
10.00
1.25
1.00
1.25
0.21
0.33
10.00
1.25
1.00
1.25
0.21
0.34
10.00
1.25
1.00
1.25
0.21
0.36
10.00
1.25
1.00
1.25
0.21
0.38
10.00
1.25
1.00
1.25
0.21
0.40
10.00
$9.06

Contribution
1.72
1.80
1.89
1.99
2.09
2.19
2.30
2.42
2.54
2.66

XYZ Company
with cash accounting and no payment lags
Parameters
Price
Cost

1.00
0.75

Initial cash
Sales delta

875
500

Calculations
Sales units
Unit price
Revenue
Begin Inventory
Ending Inventory

Jan
Feb
Mar
Apr
May
Jun
1000
1500
2000
2500
3000
3500
$1.00
$1.00
$1.00
$1.00
$1.00
$1.00
$ 1,000 $ 1,500 $ 2,000 $ 2,500 $ 3,000 $ 3,500
1000
1000

1000
1500

1500
2000

2000
2500

2500
3000

3000
3500

Production units
Unit cost
Production cost

1000
2000
$0.75
$0.75
$
750 $ 1,500 $

2500
3000
3500
4000
$0.75
$0.75
$0.75
$0.75
1,875 $ 2,250 $ 2,625 $ 3,000

Profit
Inventory value
Net Cash

$
250
$
750
$ 1,125

125
1,500
1,250

Results
$
$ 1,125
$ 1,125

$
$
$

$
250
$ 1,875
$ 1,500

$
375
$ 2,250
$ 1,875

$
500
$ 2,625
$ 2,375

After breaking even in February, the XYZ Company anticipates increasing profits.

XYZ Company
with payment lags and accrual accounting
Parameters
Price
Cost

$
$

1.00
0.75

Initial cash
Sales delta
Initial Receivables

875
500
1000

Calculations
Sales units
Unit price
Begin Inventory
Ending Inventory

Jan
1000
1.00

Feb
1500
1.00

Mar
2000
1.00

Apr
2500
1.00

May
3000
1.00

Jun
3500
1.00

1000
1000

1000
1500

1500
2000

2000
2500

2500
3000

3000
3500

Sales value
Cost of sales

$ 1,000
$
750

$ 1,500
$ 1,125

$ 2,000
$ 1,500

$ 2,500
$ 1,875

$ 3,000
$ 2,250

$ 3,500
$ 2,625

Cash In
Production units
Unit cost
Cash Out

$ 1,000 $ 1,000 $ 1,500 $ 2,000 $ 2,500 $ 3,000

1000
2000
2500
3000
3500
4000
$ 0.75 $ 0.75 $ 0.75 $ 0.75 $ 0.75 $ 0.75
$
750 $ 1,500 $ 1,875 $ 2,250 $ 2,625 $ 3,000

Net Income
Receivables
Inventory value
Net Cash

$
250
$ 1,000
$
750
$ 1,125

Results
$
375
$ 1,500
$ 1,125
$
625

$
500
$ 2,000
$ 1,500
$
250

$
625
$ 2,500
$ 1,875
$
-

$
750
$ 3,000
$ 2,250
$ (125)

$
875
$ 3,500
$ 2,625
$ (125)

In spite of increasing net income, the XYZ Company will run short of cash at the end of April.

at the end of April.

Medical Supplies
Item
A bandage
B bandage
C bandage
Rolls
Aids
Population

Size
30
30
30
2
1

Cost Children Teens Seniors Other

$3.00
2
$5.00
2
$6.00
2
2
$2.50
1
1
1
1
$5.00
5%
3000

2500

500

9000

Total
6000
5000
19000
15000

Stock
200
167
634
501
25

packages
packages
packages
rolls
aids

0
0
0
0
0
Cost of Order

Order
200 $600.00
167 $835.00
634 $3,804.00
501 $1,252.50
25 $125.00
Cost of Order

$6,616.50

Reid's Raisin Co.

Parameters
Fixed values Coating cost $
Grapes/unit
Coat/unit
Vbl. Cost
$
Outsource
$
Capacity
Fixed Cost
Unknowns Grape Price
Base case Grape cost
Supply
Raisin Market Base price
Base Qty
Factor
Raisin Price
Actual Qty

0.55
2.50
0.05
0.20
0.45

per lb
lbs per lb
lbs per lb
per lb
per lb

1,500,000 lbs
200,000
$0.30 per lb.
0.25 per lb
1,000,000 lbs
2.20
750,000
15,000
$2.20
750,000

per lb
lbs
lbs/penny
per lb
lbs

Financial
Sales
Raisins (lb)
Raw Material Sugar coat (lb)
Coat costs
Grapes
Used
Unused
Open Mkt
Grape cost
R.M. cost
Fixed cost
Processing
Capacity
In house
Sub
Process cost
Total cost

$
$
$

750,000
37,500
20,625
1,875,000
1,000,000
875,000
512,500
533,125
200,000

$
$

1,500,000
1,500,000
375,000
468,750
1,201,875

Revenue

1,650,000

Profit

448,125

$
$

448,125
-

Profit

Base case
Delta

$
$
$

0.25
0.25
0.30

$
$

0.20
0.45

Big Rig Trucks

Parameters

Trucks
Tax Rate
Discount Rate

Demand

Price Adjust

Revenues

Base Price
Adjusted Price
Base Util
Adjusted Util
Trucks used
Sales/mo
Annual

50 Investment
$
30% Base rent
$
10% Base utilizn
Delta demand
0

$
$

NPV

400,000 Tax increase

1,000 Maint. Incr.
62% Multiplier
7%
$

3%
9%
3

55,122

Year 1
Year 2
Year 3
Year 4
1,000 $
1,000 $
1,000 $
1,000 $
1,000 $
1,000
$1,000
$1,000
62%
62%
62%
62%
62%
62%
62%
62%

Year 5
1,000
$1,000
62%
62%

$
$

31
31,000 $
372,000 $

31
31,000 $
372,000 $

31
31,000 $
372,000 $

31
31,000 $
372,000 $

31
31,000
372,000

4,800
240,000
35,000
60,000
335,000 $

5,232
261,600
36,050
60,000
357,650 $

5,703
285,144
37,132
60,000
382,276 $

6,216
310,807
38,245
60,000
409,052 $

6,776
338,780
39,393
60,000
438,172
(66,172)
1,116,000
1,049,828
314,948
734,879

Costs
Maintenance
Annual
Prop Taxes
Fixed
Total
Profit

Cash Flow

Income
Sale
Total income

37,000

14,350

(10,276) $

37,000

14,350

(10,276) $

(37,052) $
$
(37,052) $

Taxes

$
$

11,100
25,900

$
$

4,305
10,045

$
$

$
(10,276) $

$
(37,052) $

Flexible Insurance Coverage

Parameters

Policy Parameters
Deductible Family
Co-Ins
1500
2500
0%
500
1000
20%
250
500
20%
100
200
10%

Plan
1
2
3
4
Employee
Data

Family
Size

Costs
600
500
250
100

Annual
Expenses

Parent
600

Pay
Co-Pay
1800
0
1000
160
500
260
200
160

Total
1800
1160
760
360

Enter 3

3 for Family

Outlays
1200
500
250
100

Cost
Premium w/ Premium
4929
6729
5444
6604
6063
6823
6959
7319
6604

0
0
0
0

Best Plan
2

min

Premium Data
Size 1
Size 2
Size >2
1825
3651
4929
2016
4032
5444
2245
4491
6063
2577
5154
6959
Parent
1200

Child
0

Total
1800

Versioning
Product Educational

Large Scale

High Speed

Size (000)

Cost (000)

Segment
Students
Laboratories
Consultants
Small Cos.
Large Cos.
Fixed cost (000)
Variable cost
Price

25
125
100
75
150

40
300
500
250
1000

75
1000
750
500
2500

0
10.00
200.00

100,000
20.00
200.00

150,000
36.00
450.00

-175.000
-75.000
-100.000
-125.000
-50.000

-160.000
100.000
300.000
50.000
800.000

-375.000
550.000
300.000
50.000
2050.000

Value
Students
Laboratories
Consultants
Small Cos.
Large Cos.
Entry 1 if yes; 0 if no

Students
Laboratories
Consultants
Small Cos.
Large Cos.
Fixed cost

Price paid
0.00
450.00
450.00
450.00
450.00

Revenue
540,000
5,399,996
10,799,993
2,699,998

Adv. Cost
75,000
150,000
200,000
100,000
150,000

400,000
1,200
12,000
24,000
6,000

Max
-160.000
550.000
300.000
50.000
2050.000

Vbl cost
43,200
432,000
864,000
216,000

350,000
75,000
150,000
200,000
100,000

Active?
0
1
1
1
1

Profit
421,800
4,817,996
9,735,993
2,383,998
17,209,787

Choice
0
3
3
3
3

Cox Cable & Wire

Customer Demand
Reels - Plastic
Reels - Teflon
Revenue/Reel
Plastic
Teflon
Machine Capacity
Hours Available

June
50
30

July
August
100
50
60
50

Total
200
140

360
400

Income Summary
Revenue
Cost
Profit

$
$
$

Profitability
June
July
August

Hours per Reel

Plastic
Teflon

Plastic
72,000
57,300
14,700
21.2%

General National
140
250
60
80
150
100
General National
2.0
2.5
1.5
2.0

Costs
Material Cost/Reel
Packaging Cost/Reel
Inventory Cost/Reel/Mo.

Machine Cost/Hour
Machine Cost/Reel

Plastic
Teflon
Plastic
Teflon
Plastic
Teflon

$ 160
$ 200
$ 40
$ 40
$ 10
$ 10
General
$ 30
General
Plastic $ 60
Teflon $ 45

Production Plan
Reels Produced Plastic -June
Plastic -July
Plastic -August
Plastic-Total
Teflon-June
Teflon-July
Teflon-August
Teflon-Total
Total-June
Total-July
Total-August
Grand Total
Hours Scheduled June
July
August
Total

National
$ 30
National
$ 75
$ 60

General National
40.00
90.00
10.00
10.00
40.00
20.00
90.00 120.00
40.00
0.00
25.00
25.00
40.00
20.00
105.00
45.00
80.00
90.00
35.00
35.00
80.00
40.00
195.00 165.00
140.00 225.00
57.50
75.00
140.00
90.00
337.50 390.00

Total
130.00
20.00
60.00
210.00
40.00
50.00
60.00
150.00
170.00
70.00
120.00
360.00
365.00
132.50
230.00
727.50

July
August
100.00
50.00
20.00
60.00
80.00
0.00

Total
200.00
210.00

Shipping
Plastic Demand
Plastic Production
Plastic Inventory In

June
50.00
130.00
0.00

Cost Accounting
Machine Costs
Plastic
Teflon
Total
Material Cost
Plastic
Teflon
Total
Packaging Cost
Plastic
Teflon
Total
Inventory Cost
Plastic
Teflon
Total

Plastic Inventory Out

Plastic Shipped
Teflon Demand
Teflon Production
Teflon Inventory In
Teflon Inventory Out
Teflon Shipped

80.00
50.00
30.00
40.00
0.00
10.00
30.00

0.00
100.00
60.00
50.00
10.00
0.00
60.00

10.00
50.00
50.00
60.00
0.00
10.00
50.00

90.00
200.00
140.00
150.00
20.00
140.00

$
$
$

Teflon
56,000
43,625
12,375

Total
$ 128,000
$ 100,925
$ 27,075

General

National

Total

$
$
$

5,400
4,725
10,125

$
$
$

9,000
2,700
11,700

$
$
$

14,400
7,425
21,825

$
$
$

14,400
21,000
35,400

$
$
$

19,200
9,000
28,200

$
$
$

33,600
30,000
63,600

$
$
$

3,600
4,200
7,800

$
$
$

4,800
1,800
6,600

$
$
$

8,400
6,000
14,400

$
$
$

900
200
1,100

BMW Analysis
Base Year 89
BMW mkt share
Vehicles recycled (000)
Percent recycled
Total EOL vehicles (000)

2100 Given
95% Given
2211 Calculated

Avg. vehicle weight (kg)

Weight recycled (KT)
Weight ASR
Pct. ASR

1000
2100
400
19%

Given
Calculated
Given
Calculated

Disposal components
Landfill cost per T
Percent of mix
Incineration cost per T
Percent of mix
Weighted average cost/T

60
76%
120
24%
74

Given
Nat'l figure 65:35
Twice landfill
Complement
Calculated

1400
165
31
19%

74
BMW disposal cost (M)
BMW net income (M)
Percentage

Growth
Inflation
Vehicles recycled (000)
Percent recycled
Total EOL vehicles (000)

Projected 99
2%
4%
2560 From growth
95% Unchanged
2695 Calculated

Avg. vehicle weight (kg)

Weight recycled (KT)
Weight ASR
Pct. ASR

1000
2560
400
25%

Disposal components
Landfill cost per T
Percent of mix
Incineration cost per T
Percent of mix
Weighted average cost/T

1800 600 - 1800

50%
3000 Twice L/F?
50%
2400

BMW in 89
5.60%
117.6
95%

2.3
386
0.6%
BMW in 99

BMW mkt share

Unchanged
Calculated
Calculated
Based on Ex.1

6.80%
174.1
95%

1400
244
61
25%

2400
BMW disposal cost (M)
BMW net income (M)
Percentage

146.2
691
21.2%

With "business as usual," disposal-related costs will rise to over 21% of net income.

From share
Same as industry

Based roughly on Ex.1

Calculated
Calculated
Same as industry

Given
Computed
Unchanged

Unchanged
Calculated
Calculated
Same as industry

1% of net income.

Auto Leasing Prototype

Parameters
Sale Price
Term
Lease rate
Borrowing rate
Elasticity

25,000
36
0.15
0.05
0.5

Actual residual value

Decision
Contract Residual Value

9,500

9,750

10,000

10,250

Monthly payment

537

529

520

511

Lease Cost

749

749

749

749

Leases sold

3,640

4,015

4,394

4,776

Model

Actual residual

#NAME?

#NAME?

#NAME?

#NAME?

Residual gain
Residual loss

#NAME?
#NAME?

#NAME?
#NAME?

#NAME?
#NAME?

#NAME?
#NAME?

NPV of payments
NPV of trade-in

-7,072
#NAME?

-7,361
#NAME?

-7,651
#NAME?

-7,940
#NAME?

NPV per car

#NAME?

#NAME?

#NAME?

#NAME?

Total NPV

#NAME?

#NAME?

#NAME?

#NAME?

Mean NPV

#NAME?

#NAME?

#NAME?

#NAME?

4,000,000
3,800,000
3,600,000
3,400,000
3,200,000
3,000,000
2,800,000
2,600,000
2,400,000

2,400,000
2,200,000
2,000,000
9,500

9,750

10,000 10,250 10,500 10,750

tual residual value

mean
SD

Repurchase
12000
2000

zone of repurchase

10,500

10,750

11,000

11,250

11,500

503

494

485

477

468

749

749

749

749

749

5,160

5,549

5,940

6,335

6,734

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?
#NAME?

#NAME?
#NAME?

#NAME?
#NAME?

#NAME?
#NAME?

#NAME?
#NAME?

-8,229
#NAME?

-8,518
#NAME?

-8,807
#NAME?

-9,096
#NAME?

-9,385
#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

#NAME?

25%

10,750 11,000 11,250 11,500

The ERP/CRM Decision

Assumptions
ERP (1) or ERP and CRM (2)
Initial sales
Sales growth ERP
Sales growth CRM
Legacy maintenance initial
Legacy maintenance increase
ERP hardware 2005
ERP hardware 2006
ERP software 2005
ERP software 2006
CRM hardware 2006
CRM software 2007
Consultant days
Inventory turns without ERP
Inventory turns with ERP
Management optimism (O,N,P)
Efficiency gains O
Efficiency gains N
Efficiency gains P
Hurdle rate
COGS
Cost of inventory

1
5,000,000
0.01
0.02
5,000,000
100,000
5,000,000
1,000,000
10,000,000
1,000,000
1,000,000
1,000,000
225
11.0
13.0
O
7,000,000 O
0N
-5,000,000 P
0.10
0.75
3.50

NPV Gains
($Millions)

2005

2006

2007

2008

No ERP
ERP only
ERP and CRM

5,000,000
5,000,000
5,000,000

5,000,000
5,000,000
5,000,000

5,000,000
5,050,000
5,050,000

5,000,000
5,100,500
5,100,500

No ERP
ERP only
ERP and CRM

454,545
454,545
454,545

454,545
454,545
454,545

454,545
388,462
388,462

454,545
392,346
392,346

3,375,000
0
10
1,000,000
5,000,000
3,000,000
5,000,000
10,000,000
0
0
22,375,000

2,727,000
0
18
1,890,000
5,100,000
2,000,000
1,000,000
1,000,000
0
0
8,617,000

2,065,500
0
24
2,646,000
5,200,000
1,000,000
0
0
0
0
5,711,500

1,390,500
695,250
28
3,241,336
5,300,000
500,000
0
0
1,000,000
1,000,000
5,131,836

12,500

25,125

Sales

Inventory

Costs
ERP consultants
CRM consultants
Added employees
Cost of added employees
Legacy maintenance
Training costs
ERP hardware
ERP software
CRM hardware
CRM software
Total
Net Gains
Revenue increase

Inventory decrease
Legacy cost savings
Efficiency gains
Cost
Net gain

0
0
0
-22,375,000
-22,375,000

0
0
0
-8,617,000
-8,617,000

231,294
5,200,000
7,000,000
-5,711,500
6,732,294

217,698
5,300,000
7,000,000
-5,131,836
7,410,987

$27.32

2009

2010

2011

2012

2013

2014

2015

5,000,000
5,151,505
5,202,510

5,000,000
5,203,020
5,306,560

5,000,000
5,255,050
5,412,691

5,000,000
5,307,601
5,520,945

5,000,000
5,360,677
5,631,364

5,000,000
5,414,284
5,743,991

5,000,000
5,468,426
5,858,871

454,545
396,270
400,193

454,545
400,232
408,197

454,545
404,235
416,361

454,545
408,277
424,688

454,545
412,360
433,182

454,545
416,483
441,845

454,545
420,648
450,682

702,000
351,000
30
3,646,500
5,400,000
200,000
0
0
0
0
4,548,500

354,375
354,375
31
3,956,437
5,500,000
100,000
0
0
0
0
4,410,812

0
0
32
4,288,256
5,600,000
0
0
0
0
0
4,288,256

0
0
32
4,502,656
5,700,000
0
0
0
0
0
4,502,656

0
0
32
4,726,656
5,800,000
0
0
0
0
0
4,726,656

0
0
32
4,964,160
5,900,000
0
0
0
0
0
4,964,160

0
0
32
5,212,352
6,000,000
0
0
0
0
0
5,212,352

37,876

50,755

63,763

76,900

90,169

103,571

117,107

203,965
5,400,000
7,000,000
-4,548,500
8,093,342

190,096
5,500,000
7,000,000
-4,410,812
8,330,039

176,088
5,600,000
7,000,000
-4,288,256
8,551,594

161,940
5,700,000
7,000,000
-4,502,656
8,436,184

147,650
5,800,000
7,000,000
-4,726,656
8,311,163

133,217
5,900,000
7,000,000
-4,964,160
8,172,628

118,640
6,000,000
7,000,000
-5,212,352
8,023,395

2016

2017

2018

2019

2020

2021

2022

2023

5,000,000
5,523,111
5,976,049

5,000,000
5,578,342
6,095,570

5,000,000
5,634,125
6,217,481

5,000,000
5,690,466
6,341,831

5,000,000
5,747,371
6,468,667

5,000,000
5,804,845
6,598,041

5,000,000
5,862,893
6,730,001

5,000,000
5,921,522
6,864,601

454,545
424,855
459,696

454,545
429,103
468,890

454,545
433,394
478,268

454,545
437,728
487,833

454,545
442,105
497,590

454,545
446,527
507,542

454,545
450,992
517,692

454,545
455,502
528,046

0
0
32
5,472,960
6,100,000
0
0
0
0
0
5,472,960

0
0
32
5,746,592
6,200,000
0
0
0
0
0
5,746,592

0
0
32
6,033,920
6,300,000
0
0
0
0
0
6,033,920

0
0
32
6,312,117
6,400,000
0
0
0
0
0
6,312,117

0
0
32
6,592,597
6,500,000
0
0
0
0
0
6,592,597

0
0
32
6,873,077
6,600,000
0
0
0
0
0
6,873,077

0
0
32
7,153,557
6,700,000
0
0
0
0
0
7,153,557

0
0
32
7,434,037
6,800,000
0
0
0
0
0
7,434,037

130,778

144,585

158,531

172,617

186,843

201,211

215,723

230,381

103,918
6,100,000
7,000,000
-5,472,960
7,861,735

89,048
6,200,000
7,000,000
-5,746,592
7,687,041

74,029
6,300,000
7,000,000
-6,033,920
7,498,641

58,860
6,400,000
7,000,000
-6,312,117
7,319,360

43,540
6,500,000
7,000,000
-6,592,597
7,137,785

28,066
6,600,000
7,000,000
-6,873,077
6,956,200

12,438
6,700,000
7,000,000
-7,153,557
6,774,604

-3,347
6,800,000
7,000,000
-7,434,037
6,592,996

2024
5,000,000
5,980,737
7,001,893

454,545
460,057
538,607

0
0
32
7,714,528
6,900,000
0
0
0
0
0
7,714,528

245,184

-19,289
6,900,000
7,000,000
-7,714,528
6,411,367

Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024

Number
Number of Number of
of added
ERM
CRM
Cost of
program
Consultants Consultants consultants mers
10
0
1,500
10
8
0
1,515
8
6
0
1,530
6
4
2
1,545
4
2
1
1,560
2
1
1
1,575
1
0
0
1,590
1
0
0
1,605
0
0
0
1,621
0
0
0
1,637
0
0
0
1,653
0
0
0
1,669
0
0
0
1,685
0
0
0
1,701
0
0
0
1,717
0
0
0
1,733
0
0
0
1,749
0
0
0
1,765
0
0
0
1,781
0
0
0
1,797
0

Cost of
added
program
mers
100,000
105,000
110,250
115,762
121,550
127,627
134,008
140,708
147,708
155,130
162,886
171,030
179,581
188,560
197,254
206,019
214,784
223,549
232,314
241,079

Training
costs
3,000,000
2,000,000
1,000,000
500,000
200,000
100,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0

MegaMicro prototype
SGP
19-Jan-04

Mega
Success

Phase II

1
0

0.5
0.5

Phase III

1
0

0.8
0.2

1
0

0.9
0.1

1
0

0.1
0.9

Outcomes
Mega
Phase II
Phase III

#NAME?
#NAME?

Micro
Mega succeeds
Success
(conditional)
Mega fails

Micro
Succeeds #NAME?
Micro sues?#NAME?
Micro wins #NAME?
Mega to market
#NAME?
Micro to market
#NAME?

Micro sues?

1
0

0.9
0.1

Micro wins

1
0

0.5
0.5

2005
500

2006
500

Mega share
Share
Mega fails #NAME?
0.0
Mega shares#NAME?
0.5
Mega alone #NAME?
1.0
#NAME? Actual
Market size
start
2002
peak
2005
patent expires 2012
end
2020
max
500
upslope
166.7
downslope
-62.5

2002
0

2003
167

2004
333

PV market sales
$2,859
Mega PV

#NAME?
#NAME? mean

Micro share
Share
Micro fails #NAME?
0.0
Micro shares#NAME?
0.5
Micro alone #NAME?
1.0
#NAME? Actual
Micro PV
500 #NAME?
900 #NAME?

#NAME? mean
#NAME? mean

2007
500

2008
500

2009
500

2010
500

2011
500

2012
500

2013
438

2014
375

2015
313

2016
250

2017
188

2018
125

2019
63

2020
0