I am looking for real-life examples of business situations to share with my business students who are learning to analyze decision opportunities. I would appreciate some examples that you may have faced at a company. Any subject is fine: inventory, scheduling, quality, risk, human resources, demand, customer relations, marketing, transportation--all okay. Students are using spreadsheets with a Monte Carlo Simulation plug-in to develop models and provide decision analysis and support. The text has examples, but I am seeking variety and realism. Most of the students are active military or veterans, so your examples will be enabling their development and transition. Thank you!
Mr. Martin -
A very basic example would be how companies plan for the next year. The next year could mean the calendar year or the fiscal year OR the very next 12 months. Many companies use their Income Statement format and make a sales forecast and then plug in costs. Some companies estimate costs first and then plug in a revenue estimate. Both of these methods reduce net income or “profit” to a residual number. Profit is what’s left. Both methods are wrong.
When estimating next year’s pro forma, start with the bottom line and work in reverse. For example, if the company’s goal is to earn $100,000, calculate operating income by using the appropriate income tax rate. Remember since you’re working backwards It is a division problem instead of a multiplication one.
In this method, all variables may change - tax rates, operating expenses, gross profit rates, etc. EXCEPT the bottom line.
Hope this helps
I’ve done these simulations many times at previous companies and found them to be an excellent skill development tool. I’ve also got many real-life examples of critical and very difficult decisions that businesses had to make. I’d be happy to help but I’m not sure how I can transfer my experiences to your needs. If you want to have a phone call to discuss in more detail I’d be happy to do that. Jeff
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