Term Paper: System Analysis the Company

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¶ … System Analysis

The company is going to be listed at the stock exchange; the company listing exercise will include a few activities such like Pre-Planning until the first day that the stock will be traded on the stock exchange.

The company on their road to their first listing is facing a few problems, including:

The company fails to see the relation between sales and advertising.

The company needs to efficiently describe the correct work sequence or their best alternative route to achieve IPO listing in 90 days.

The company also needs to distinguish whether to mix existing product or not.

Forecasting is the structure through which the financial statements can be constructed for incidents that have not yet taken place or are most likely to take place in the future. Hence, the financial statements made in forecasting are normally assessment and estimations of criterion variables and they are expected to act in the future, usually a specific time frame in the future.

CPM (Critical Path Method) and PERT (Program Evaluation and Review Technique) were simultaneously designed as mechanisms that help in the project management construction and planning of any and all management activities inclusive of the planning of the event, its schedules and its overall flow and control. Normally, a project is usually defined as a one-time event or incident like the construction of a building or bridge E.I. Du Pont de Nemours and Company was the first to successfully employ and use the Critical Path Method back in the 1950s, and it was in the same decade that the U.S. Navy special project office used PERT in their planning for the Polaris Missile system.

Linear programming, also known as linear optimization, is primarily a mathematical formula that is used to achieve the minimum or maximum levels or degree of various linear functions that are placed on the convex polyhedron. The premium or most accurate results, which are normally standardized as attaining max profits and min costs incurred, can be attained using the linear programming structure with the specifications of the different circumstances and limitations. Some of the common areas where linear programming is popularly used include areas of management, engineering and economics.

FORECASTING

Purpose for the Model

As aforementioned, forecasting is the structure through which the financial statements can be constructed for incidents that have not yet taken place or are most likely to take place in the future. Hence, the financial statements made in forecasting are normally assessment and estimations of criterion variables and they are expected to act in the future, usually a specific time frame in the future.

As forecasting involves aspects of risk taking and uncertain conditions, it is normally the standard for most companies to identify and point the percentage or level of uncertainty that is relevant to each stat or condition of forecasts. The prerequisite for accuracy of data in forecasting is the use of the most recent, relevant and update data, information and facts. Some of the common methods used in forecasting include trend assessments, causal method, decomposing of time series and trend projection.

Formulation/Details of the Model

In case of this particular company we will look into the relation between sales and advertisement. All three methods will be tested. Sales and advertisement data for the last 16 months will be used to determine the best possible projected figures.

Solution for the Model

We had used decomposing time series and exponential smoothing method into the sales and advertisement data. We also used view the trend analysis under a short-term model, long-term model and simple regression model. We found that that the sales figure hovered between 37 units and 48 units.

Interpretation of the Model

Under the decomposing time series, the average, a=46.333 with min sale at, a=37.26; the probability or the risk of this going to happen, b=0.6. When tested using exponential smoothing, MAD=47.65

PERT/CPM MODEL

Purpose for the Model

CPM (Critical Path Method) and PERT (Program Evaluation and Review Technique) were simultaneously designed as mechanisms that help in the project management construction and planning of any and all management activities inclusive of the planning of the event, its schedules and its overall flow and control. Normally, a project is usually defined as a one-time event or incident like the construction of a building or bridge E.I. Du Pont de Nemours and Company was the first to successfully employ and use the Critical Path Method back in the 1950s, and it was in the same decade that the U.S. Navy special project office used PERT in their planning for the Polaris Missile system.

Both PERT and CPM are structures that are based around time and its use and are thus revolved around any and all time constraints and schedule issues that might surface in the completion of the projects. The primary difference between the two structures is in their estimations of time schedules. PERT views the time duration for all management tasks as part of probability distributions which can be calculated using the beta distribution calculations. Hence, all time estimations for management tasks in the PERT model are viewed under probabilistic measures. One the other hand, all time estimations for management tasks in the CPM model are viewed under deterministic measures.

Formulation/Details of the Model

The model formulation starts from (1) project objectives, (2) Defining the work items, (3) work packages and finally (4) work activities. After these have been identified, the next step is to determine the critical path and activity on node. The company only has 90 days reserved for the listing exercise.

Solution for the Model

A total of 10 activities had been identified and based on minima, most likely and maximum time for each of the activities; the whole activity can be done and finished in 81 to 82 days.

Interpretation of the Model

Most of the activity is critical with expected latest start and latest finish that leaves a gap of only about 20 days. This gap is contributed by slack activity generated by BOD decision that has a slack between 0-20 days.

3 Model System Analysis 1

LINEAR PROGRAMMING MODEL

Purpose for the Model

Linear programming, also known as linear optimization, is primarily a mathematical formula that is used to achieve the minimum or maximum levels or degree of various linear functions that are placed on the convex polyhedron. The premium or most accurate results, which are normally standardized as attaining max profits and min costs incurred, can be attained using the linear programming structure with the specifications of the different circumstances and limitations. Some of the common areas where linear programming is popularly used include areas of management, engineering and economics.

Formulation/Details of the Model

Strategy One

The company plans to introduce three new products (Product D. And E) and mix these new products with their existing products (Product A, B and C). This strategy will also affect the development detail and net revenue per products.

Products

Development Cost

(In Million)

Operational

Employee

Net Revenue

Per Products

A

4.125

16

1.2

B

6.25

15

2.0

C

6.375

23

2.5

D

8.428

20

2.5

E

10.540

18

3.5

Table 1: Strategy One Operational Detail and Variable

Under this strategy, the company plans to introduce only 100 units of this products mix to test the existing market. Cash flow generated from this test market will be used as a revolving fund to generate more sales in the future.

Under this strategy, the company will spend maximum $125 million in development cost and allocate maximum 300 staff members. The company need to establish the product mix that maximizes the revenue.

Strategy Two

The company also consider a market differentiation strategy. Under this strategy, the existing product will be rebranded, reintroduced or enhanced.

Products

Development Cost

(In Million)

Operational

Employee

Net Revenue

Per Products

A

4.125

30

1.2

B

8.25

15

2.0

C

12.375

45

2.6

Table 2: Strategy Two Operational Detail and Variable

Under this strategy, the company will spend maximum $125 million in development cost and allocate maximum 300 staff members.

Solution for the Model

Assign the variable:a = Product A, b = Product B, c = Product C, d = Product D, e = Product E

Strategy One Constrain

i. A + b + c + d + e 100

ii. 4.125a + 8.25b + 12.375c + 10.428d + 26.540e 125

iii. 30a + 15b + 45c + 20d + 50e 300

Objective function: N (a, b, c, d, e) = 1.2a + 2.0b + 2.6c + 3.0d + 5.0e

Final

Cell

Value

$D$9

a = Product E

0

$F$9

b=

0

$H$9

c=

7

$J$9

d=

0

$L$9

e=

8

Constraints

Final

Cell

Value

$G$18

a + b + c + d + e <= 500 c=

15

$G$19

4.125a + 8.25b + 12.375c + 10.428d + 26.540e <= 1250 c=

$G$20

30a +15b + 45c + 20d + 50e <= 800 c=

$G$22 Maximize 1.2a + 2.0b + 2.6c + 3.0d + 5.0e c= 0-44.24492833

Table 3: Strategy One Linear Programming Result… [END OF PREVIEW]

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