Running Simulation Paper
Group Member: Huiqiong Wang, Zhengyangzi Zhan, Yang Zhou
Group Number: 5
Date: 10/22/2014
Instructor: Janet BartholowIntroduction
This paper is aim to find the best way to run the New Heritage Doll Company by running simulation. We use different strategies to selecting projects in each round by using limited budget. We have run the simulation more than ten times to make sure we found the best way to run the company and the company is in the best condition. The given scenario is never change and we have the opportunity to run simulation multiple times, it made us easier to know which strategy is the best.
We use different strategies in each one of our simulations. These strategies can mainly divided into three parts, which are conservative …show more content…
The Warehouse Facility Consolidation project is aim to improve the NH’s warehouse facilities and can save the company’s operating costs as well as increase the shipping speed. This project is in retail division with an NPV of 2.29, an IRR of 13.56%, and a payback period of 8.23 years and a payback index of 0.31. Also, this project was considered as a medium risk project with 9.25% discount rate. Expansion of Mail-order Catalog Business to Asia is a retail division project, it is considering expanding its mail-order to the Asian market. Although there two possibilities that might happen, succeed or fail, it viewed as a low risk project with very low lifetime project costs which is only 2.73 million. It had an IRR of 19.77%, a discount rate of 8.46%, and a payback period is more than 10 years and the profitability index of this project is 2.85. I choose this project is because the Asian market is a very big market, since the project is low risk and the cost of this project is very low, we think it is worth to try, because if this project is succeed, the company will earn more profit. The last project we selected for this year is Retail Store Expansion in Northeast. The NPV of this project is 5.34 and it had an IRR of 37.45%, a discount rate of 10.04% and a payback period is 5.33 years. We suggested …show more content…
They are: 1.‘Match my Doll’ Clothing Line, 2.Retail Store Expansion in Northeast and 3.New Doll Film / DVD. We choose these three projects because they are all high or medium risks. Usually the high risk comes with the high return. So we want to see what will happen if we all choose high or medium risker projects. Even if these three projects do not have good 1 Yr. EBITDA, it has the highest three 5 Yr. EBITDA. So when we choose these three projects we do not want it went well in the first year but for the future benefits. After a whole year running, in 2010 the net income was 12.58 million and it was less than 2009. The revenue became 252.42 million and the APV we got this year was 319.38. This is not a problem now because the future view form the financial analysis and project details were going very
Group Number: 5
Date: 10/22/2014
Instructor: Janet BartholowIntroduction
This paper is aim to find the best way to run the New Heritage Doll Company by running simulation. We use different strategies to selecting projects in each round by using limited budget. We have run the simulation more than ten times to make sure we found the best way to run the company and the company is in the best condition. The given scenario is never change and we have the opportunity to run simulation multiple times, it made us easier to know which strategy is the best.
We use different strategies in each one of our simulations. These strategies can mainly divided into three parts, which are conservative …show more content…
The Warehouse Facility Consolidation project is aim to improve the NH’s warehouse facilities and can save the company’s operating costs as well as increase the shipping speed. This project is in retail division with an NPV of 2.29, an IRR of 13.56%, and a payback period of 8.23 years and a payback index of 0.31. Also, this project was considered as a medium risk project with 9.25% discount rate. Expansion of Mail-order Catalog Business to Asia is a retail division project, it is considering expanding its mail-order to the Asian market. Although there two possibilities that might happen, succeed or fail, it viewed as a low risk project with very low lifetime project costs which is only 2.73 million. It had an IRR of 19.77%, a discount rate of 8.46%, and a payback period is more than 10 years and the profitability index of this project is 2.85. I choose this project is because the Asian market is a very big market, since the project is low risk and the cost of this project is very low, we think it is worth to try, because if this project is succeed, the company will earn more profit. The last project we selected for this year is Retail Store Expansion in Northeast. The NPV of this project is 5.34 and it had an IRR of 37.45%, a discount rate of 10.04% and a payback period is 5.33 years. We suggested …show more content…
They are: 1.‘Match my Doll’ Clothing Line, 2.Retail Store Expansion in Northeast and 3.New Doll Film / DVD. We choose these three projects because they are all high or medium risks. Usually the high risk comes with the high return. So we want to see what will happen if we all choose high or medium risker projects. Even if these three projects do not have good 1 Yr. EBITDA, it has the highest three 5 Yr. EBITDA. So when we choose these three projects we do not want it went well in the first year but for the future benefits. After a whole year running, in 2010 the net income was 12.58 million and it was less than 2009. The revenue became 252.42 million and the APV we got this year was 319.38. This is not a problem now because the future view form the financial analysis and project details were going very