Reference no: EM133652459
Write a response for each of the following classmates post. Write a clear and detailed response. So in total, there should be 2 responses.
Classmate 1
In my opinion, I would use 3 prescriptive techniques in analyzing where this company should build their new manufacturing plant. First, I would perform a cash flow analysis to analyze which location would have the best internal rate of return, and which location would be associated with the most risk. Second, I would run a scenario analysis where I would compare and contrast how the potential unique opportunities and challenges would positively/negatively affect the potential revenue for each location.
A second scenario analysis could also be helpful for testing how the availability of skilled labor and materials would also impact the potential revenues for the company. Essentially, this acts as a way to determine which potential issues or opportunities have the most gravity to them. No matter what, there will be both good aspects and bad, but it's important that we determine what good things are REALLY good and which things are REALLY bad, so that we may choose problems that are easier to tackle. Third, I would conduct a goal-seek analysis, given there is an established goal. This would just help in finalizing which location is optimal for achieving what the company wants to achieve, following the first 2 techniques.
The financial questions I would consider are:
- Which property should the company invest in?
- How significantly does a particular issue at a certain location impact the company's performance?
- What demand is necessary for the company to reach its revenue goal?
Sources
Richardson, Vernon J, and Marcia Weidenmier Watson. Introduction to Business Analytics. 1st edition ed., McGraw Hill, 2023.
Classmate 2
In the scenario of choosing a location for a new manufacturing plant, the most suitable prescriptive analytic technique to employ would be Multi-Criteria Decision Analysis (MCDA). MCDA is designed to handle complex decision-making scenarios involving multiple criteria and alternatives, making it ideal for evaluating various factors influencing the choice of a manufacturing plant location.
Using MCDA, the VP of Finance can consider factors such as skilled labor availability, material costs, transportation logistics, local regulations, and predicted revenue streams. By assigning weights to each criterion based on its importance to the company's objectives, MCDA can quantify the qualitative aspects of the decision-making process. This approach allows for a systematic comparison of the three potential locations, enabling the identification of the most optimal choice that aligns with the company's financial goals.
Key financial questions to consider in this analysis might include cost analysis, revenue projections, risk assessment, return on investment, and sensitivity analysis.
- What are the projected costs associated with each location, including labor, materials, utilities, and regulatory compliance?
- What are the predicted revenue streams for each location, factoring in market demand, potential clients, and sales forecasts?
- What are the potential risks associated with each location, such as political stability, supply chain vulnerabilities, or environmental concerns?
- Introduction to Business Analytics
- What is the expected ROI for each location, considering the initial investment, operational costs, and revenue projections?
- How sensitive are the financial outcomes to changes in key variables, such as labor costs or raw material prices?