Activity: Red Plato Case Study

Red Plato is a hypothetical company that produces read and write computer disks. The case will provide a brief history of the company, information on returned products, sales, market share, and project forecasting. Based on this information, you will apply the concepts surrounding forecasting from a quantitative and qualitative perspective. In so doing, you will examine such forecasting trends as linear, asymptotic, exponential, parabolic, and hyperbolic trends and apply these threads as they relate to the Red Plato Company.

Task Description

Begin work on the Red Plato Case Forecasting Problem assignment due at the end of Week 3. This assignment is focused on the first three weeks’ readings and the concepts and ideas presented and discussed in class, particularly, strategic thinking, business planning, and forecasting. The purpose of this assignment is to demonstrate your learned understandings in these areas by reading the assigned case and completing the subsequent questions.

The work submitted must be typed, not hand written. If submitted as a hand written assignment, your grade on this assignment will be zero. Additionally, your grade will be reduced if the work is confusing or difficult to follow even if your answers are correct. This means that if you submitted all correct answers but it was difficult to follow because of the presentation of your answers, your grade could be reduced to a lower grade. Remember, this is graduate school, and I expect graduate-level submittals/presentation of your work.

This is an individual, not a team, assignment. The work completed is expected to be your own. If you are having difficulties when completing the work, I am here to help; ask and I will do my best to answer any questions you might have related to this assignment.

This assignment is due at the end of Week 3 per your facilitator’s direction. Failure to submit this assignment on time means an automatic zero unless you made prior arrangements with your facilitator.

It is important to note that Table 1 is incomplete and will need to be completed by you in order to properly answer the assigned questions. It is also important to know that each question does have a correct or best answer; stating there is not enough information provided to properly complete your response to a particular question is not an acceptable answer and will result in a score of zero for that answer. In some cases the information is limited, but this does not mean that a correct or best answer cannot be derived.

Deliverable

Analysis of forecasting at the Red Plato Company (due end of Week 3). See the Red Plato case file below, and read the facilitator’s posting for more details regarding this assignment, which is due at the end of Week 3-you will have two weeks to complete this assignment.

 Table 1

Grading Criteria

This is a quantitative problem-solving assignment with expected objective correct answers based on calculating, answering, and plotting specific forecasting questions.

Review the following information, and then complete the questions found at the end of this case.

The Red Plato Company designs, manufactures, and sells read/write (R/W) CD disks for home or commercial business use (U.S. market only).

The R/W CD disk product provides the user a storage device from which to read, write, or write then read digital information. Red Plato’s R/W CD disk product is sold nation-wide in a variety of commercial businesses – CompUSA, Best Buy, Wal-Mart, Sears, and OfficeMax, just to mention a few. The product is found under the label RED CD.

The company has experienced good growth over the last five years. With this growth has come considerable competition from such companies as Memorex and others.

Information Provided on the Red Plato Company

I. Red Plato’s Recent Sales History:

• Actuals for 1990-2004 (see attached spreadsheet.)
• Projected for next three years 2005-2007 (see attached spreadsheet.)

II. Red Plato’s RED Product Return Information:

• Annual and monthly RED CD product returns for the years 1990-2004 (see attached spreadsheet.)
• Annual and monthly RED CD product projected returns for the years 2005-2007 (see attached spreadsheet.)

III. Information Regarding Red Plato’s Market Share As Compared To Total RED Sales:

• Total sales information of all R/W CD products in the United States (all manufactures including Red Plato and its competitors (see attached spreadsheet.)

IV. RECENT “THINK TANK” MARKETING STUDY (PUBLISHED 15 MAY 2004, WALLSTREET JOURNAL):

A study conducted by the National Communications Services (NCS), an industry watch or “think tank organization,” predicts sales for R/W CD products will increase by 18% over 2004 numbers nationally in 2005 to 169,920,000 units sold (Red Plato’s sales or market share of this number was 41%.) NCS also predicts continued sales growth for these products of 12% in 2006 over 2005, 15% growth in 2007 over 2006, followed by a 14% growth in 2008 over that of 2007. Given this information and the attached data spreadsheet (Table I), complete the following questions.

Complete the Following Questions

Note: Possible points for each question are found in brackets [ ] to the left of the question.

Part I — Testing General Math Skills (2 total points possible):

1) What is Red Plato’s annual return percentage as compared to total units sold for each of the following years and projected years? (.5)

• 1995?
• 1998?
• 2001?
• 2003?
• 2006?

2) What was Red Plato’s net profit increase/decrease in 1995 over that of 1994? (.5)

Present in both a) dollars and b) percentage.

3) What was Red Plato’s net profit increase/decrease in 2001 over that of 2000? (.5)

Present in both a) dollars and b) percentage.

4) What was Red Plato’s net profit increase/decrease in 2003 over that of 2002? (.5)

Present in both a) dollars and b) percentage.

Part II — Forecasting Trends Understanding (7.5 total points possible):

Questions 5 through 12 require only short (mostly one or two word answers) answers. You do not need to turn in the plots for questions 5 through 12, just the answers to parts (a) and (b) of each of the questions.

5) Plot the returns from January through December 1995 and answer the following questions: (1)

• What kind of trend does this data best represent (an example of the answer I would be expecting would be one of the following: linear, exponential, no trend, asymptotic, hyperbolic, and so on)?
• Purely from a data plot assessment (not a company performance point of view), is the data a negative or positive trend?

6) Plot the returns from January through December 1996 and answer the following questions: (1)

• What kind of trend does this data best represent?
• Purely from a data plot assessment (not a company performance point of view), is the data a negative or positive trend?

7) Plot the returns from January through December 1997 and answer the following questions:(1)

• What kind of trend does this data best represent?
• Would you characterize this trend as being a strong trend or a weak trend?

8) Plot the returns from January through December 1998 and answer the following questions: (1)

• What kind of trend does this data best represent?
• Would you characterize this trend as being a strong trend or a weak trend?

9) Plot the returns from January through December 1999 and answer the following question: (.5)

• What kind of trend does this data best represent?
• Omitted (no part b question)

10) Plot the returns from January through December 2000 and answer the following questions: (1)

• What kind of trend does this data best represent?
• Purely from a data plot assessment (not a company performance point of view) is the data a negative or positive trend?

11) Plot the returns from January through December 2001 and answer the following questions: (1) 

• What kind of trend does this data best represent?
• Purely from a data plot assessment (not a company performance point of view), is the data a negative or positive trend?

12) Plot the returns from January through December 2002 and answer the following questions: (1)

• What kind of trend does this data best represent?
• Purely from a data plot assessment (not a company performance point of view) is the data a negative or positive trend?

Part III — Business Strategy Understanding/Analysis (5.5 total points possible):

13) Calculate and then plot the following company information regarding Red Plato’s performance over the last 16 years (1990-2004): (.4)

• Total Net Profit Less Returns 1990-2004
  • Net Profit Per Unit Sold 1990-2004
  • Red Plato’s Market Share Percentage 1990-2004
  • Net Profit Growth In Percentages Over Previous Year 1990-2000

Turn these plots in with this assignment. These are the only four plots required to be turned in as part of this assignment.

14) Based on your analysis of this information (Question 13) and the other data presented in Table 1, answer the following operational and strategic business questions regarding Red Plato:(5.1)

• How has the company been performing in the more recent years? Be specific.
• What production decision should management consider?
• What operational strategic decisions should management consider?