Capsim:

Research and Development (R&D): is where the decision-makers can develop,

adjust, and create their new products. All the products must keep developing over the 8 years
in order to not losing the market share to the competitors. Moreover, decision-makers need to
keep an eye on the market changes and customer's expectation and do the necessary
adjustments such as improving the quality of the product, reduce its size and decrease the row
material cost so the product can fulfil the customer's needs. There are some adjustable
features at the R&D department and the all depending on each other:
Performance: it provides you with the current preference rate of your product which
you can manipulate according to your strategy.
Size: it provides you with the current size for the different sensors you produce.
Smaller size sensors cost more, and they are produced to target the high-end customers.
Meantime before failure (MTBF): this feature estimates how many hours on average
for your product before it stops working. Sensors with a longer lifetime cost more to costs
more than the sensors with less working lifetime.
After adjusting this features, the reservation date and the product age will appear to
the decision-maker but most importantly, s/he will see the cost for each adjusted and
introduced product with the material cost and a map on the right shows the spot of the
product in the market.
Financially speaking, the R&D consumes a lot of the company’s financial recourses,
however, by tweaking the R&D features, the decision-makers can reduce the cost and use
their resources on other departments.
Marketing: in the marketing department, decision-makers have the ability to enter a
price, promotional budget, sales budget, and sales forecast for every product. The marketing
department provides a Computer Prediction; however, it is not an accurate estimate so you
must determine the true forecast and enter it in the Sales Forecast section.
Accounts receivable (A/R) and accounts payable (A/P) finance decisions are also
adjustable in the marketing department. Adjusting the A/R and A/P dates show to different
stakeholders such as banks who are going to provide the loans and customers who are going
to pay the products how much of flexibility the decision-makers have in paying and
collecting money.
Remember, price ranges drop $0.50 per year, so the ranges for the upcoming year will
be $0.50 less than last year. Also, each year 33% of potential customers forget about a
company's product which means that decision-makers have to come up with a strategy that
cover the drop of the price each year and to generate money to make promotion campaign or
else they will start making losses.
Finally, marketing decisions for a new product cannot be made until the product is
available for sale.
Production: in this department, the decision-makers are allowed to determine how many
units will be manufactured during the upcoming year. The decision-makers have the ability
to:
Production Capacity: which is adjusting how many units will be produced from each product
in the next year and in how many working shifts with taking into consideration the increase
of cost in the second shift.
Buy/Sell Capacity: decision-makers need to make investment and buy capacity for every new
product they introduce; they also can sell the capacity if they are in shortage of money but the
capacity on hand will be sold at a lower price.
Increase automation: investing in automation is a great deal in the long run, it will help to
reduce the production cost and will also reduce the depending on human power.
From our experience, the production department will consume a lot of the company’s
financial recourses in the first 4 years. However, by heavily investing in this department and
with the help of reducing the cost from the R&D department, the cost in the production
department will decrease and its production capacity will increase in the last 4 years.
One of the small mistakes that we did, which affected our performance badly is we invested
and developed the automation to the max which cost us a lot of money and increases our
products reservation dates.
Finance: is considered as one of the important departments in the simulation where the
decision-makers can control their spending and generate money. The decision-makers need to
make sure that the business they run has enough money to cover all the operating expenses
and to run through the year. They can raise capital via one-year banknotes or bonds for up to
10 years. Different companies have different loans interest rate depending on the
performance of the company. Also, they can issue stock dividends, buy back stock or retire
bonds before their due dates.
In the finance department, decision-makers will be provided with the liabilities and owner's
equity pie chart which states the account payable, current debt, long term debt, common
stock, and the retained earnings which will help them making their finance decision. Also, the
simulation provides all the financial ratios needed that help in making the best possible
decisions.
The finance department works hand by hand with all the departments and monitoring the
business's expenditures. For example, finance must review marketing decisions and check
marketing’s forecasts and pricing to see if the forecasts too high or too low and make sure the
clients will be able to pay the prices marketing has set. Moreover, the finance department
needs to check on the manufacturing process if it’s too many or too few units producing and
see if the new products need additional capacity. also, to see if the production department
lowers the production cost by investing in automation or not.

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