Are you in charge of logistics management and planning for your company's activities? Do you want to increase income and reduce costs for a wide range of goods and services you produce and render? Do you want to use a powerful Markowitz-Sharpe-approach-based tool for portfolio investments analysis as applied to your company's business? If you do, the CVP optimizer is sure to help you find real reserves and reduce the routine work you do when analyzing profitability and working on planning!
Everyone who is involved in planning industrial or commercial activities is
aware of a very high extent to which costs depend on the volume of products
released to the trading network. On the other hand, the curve that shows how
income depends on demand and prices is not just a simple line, especially if
income and demand are so far at the stage of being forecast. But what if we
combine these two kinds of relationships in one diagram? How does income really
depend on costs? In that case we obtain a graph that shows a complicated curve.
Now again, what if we take into account forecast errors and large amounts of
goods that yield a return and require expenses at the same time? We then obtain
an intricate surface graph with ridges and dips looking like a heavy sea. It may
well be that while on a voyage on that rolling sea you might not be able to make
final plans, but you are more than likely to find a way of really cutting costs
which actually come down to quite a lot of money! If you are ready to set off on
that voyage, this program is going to be your reliable sailing ship equipped
with all the tools and instruments needed for navigation - from a direct cost
optimizer to a simple model of the inventory control system! Overview or CVP Optimizer
in a Nutshell...
Example: Profitability forecasting errors Name: Product Price for sales: 100 Cost of production: 85 Demand distribution:
Quarter |
I |
II |
III |
IV |
Sales |
1000 |
500 |
1000 |
1500 |
Demand average: 1000
Demand min: 500
Demand max: 1500
Variation (max-min): 1000
Type of statistics distribution: even
Solution: production plan for the next quarter = demand average = 1000. But probability of illiquid stocks P = 0 only for the minimum of Demand.
Analysis |
Usual calculation |
Statistical calculation (average) |
Optimum statistical calculation |
Production plan |
1000 |
1000 |
650 |
Illiqud stocks |
0 |
250 |
11 |
Income forecast |
100000 |
75000 |
63875 |
Expenseses |
85000 |
85000 |
55250 |
Profit |
15000 |
-10000 |
8625 |
Profitability,% |
17.64 |
-11.77 |
15.61 |
Probably the first solution is the mistake! Use the CVP optimizer!
ARCAIM SOFTWARE
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