Frequently Asked Questions
1. We bought market research information, but it wasn't there when we started the program.
The program automatically loads up the latest quarter that has not been processed (i.e., the current or "forecast" quarter). Any market research information that was purchased is linked with the quarter when it was purchased. For example, if you purchased market research information in Quarter 1, use the Quarter option and select "1". Then select the market research report option.
2. Our net income is not what we forecast. Why not?
Forecast reports are based upon your forecast of units you will sell. The actual number of units your company sells is based on the actual market demand and your company's competitive market position, not on your forecast.
3. What is the penalty for lost sales?
Loss of goodwill, which can affect demand in the following quarter, and opportunity cost of not receiving the revenue associated with the lost sales. Lost sales also can cause sales representatives for the given region to quit.
4. How do I calculate the current quarter's ROS (return on sales) and Game-to-Date ROS?
The ROS for current quarter is calculated by dividing your total net income by the total dollar sales of your company. Game-to-Date ROS is the average of the quarterly ROSs.
5. How are the Total Points Awarded on the Performance Report determined?
See the Participant's Manual.
6. What is the difference between Actual Sales and Actual Demand?
Actual Sales is the number of units sold. It differs from Actual Demand that reflects the total demand generated by a company's marketing. It includes any sales lost due to stockouts because the company did not have a sufficient inventory to meet the demand generated by the marketing efforts.
7. We ordered 50,000 units for Product 1 in Quarter 1, but our Quarter 1 Inventory report shows us receiving 55,000 units. Why?
There is a one-quarter lag between ordering inventory and receiving the units. The units you order in Quarter 1 are received in Quarter 2 and reflected in the Quarter 2 Inventory Report.
8. We requested a Short-Term Loan of $350,000 but our actual Cash Flow report shows an Emergency Short-Term Loan of $372,458. Why?
You did not request a loan sufficient to cover all of your cash needs for the quarter. The emergency loan granted is for the total amount of cash needed, not for the difference between the amount requested and the amount required.
9. The Inventory Report says there are 7,500 units of raw material available. Can we produce all of them?
Yes, if you have enough workers and the plant capacity to handle the volume. There may be an overtime charge if your production workers cannot produce the desired volume.
10. Can workers hired in a quarter begin producing goods during that quarter?
No. A worker spends one quarter being trained and can begin producing goods the following quarter.
11. Is there any limit on how many units of a product we can sell?
You are limited by the number of units you have available for sale that quarter and the actions of your competitors.
1. Do industry-wide sales for a product always equal the demand created by the Average Demand Table?
No. There are three occasions where the demand generated by the Average Demand Table will not equal the sales allocated to the companies operating in the industry.
- If a company has lost sales because of insufficient finished goods to meet the demand created by its marketing efforts, the lost sales are not redistributed to other companies in the industry.
- Price increases by companies in the industry can result in sales going to substitute products outside the industry.
- Price decreases by companies in the industry can result in additional sales from customers shifting away from substitute products outside the industry to products within the industry.
2. Any idea why a company would be showing a manufacturing COGS of $465,000 in a quarter in which they produced nothing? This same company showed over $700,000 in MCOGS last quarter, but only $17,000 the previous quarter.
The company is selling finished goods inventory remaining in inventory from prior quarters. Any goods sold in a quarter are allocated the cost associated with the making of that product, even if it was manufactured in earlier quarters. Look at the company's Inventory Report for the quarters in question. This will show you the per unit cost for items sold. Even though the COGS line on the Income Statement may have gone from $17,000 to $700,000 the per unit costs may be similar (around $40/unit) and the wide swing in total dollars is a reflection of the number of units sold. The MCOGS & Income Statements are on a cost accounting basis, not on a cash basis.