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S-Curve Forecasting for U-VERS Technology

The XYZ company introduced a new technology called U-VERSE in mid-2010 with an estimated long-term market share of 70%. By January 2011, the market share reached 5% of its peak and by April 2013 it reached 45% of its peak. The company's technology plan calls for starting R&D for the next technology 2 years before the current technology reaches its peak market share. The assignment is to determine the year the market share will peak, generate an S-curve from 2013-peak year+2, and calculate break-even point and profit/loss from 2013-2017 based on demand, costs, and a 2017 sale price.

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Faisal Saleh Raza
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60 views2 pages

S-Curve Forecasting for U-VERS Technology

The XYZ company introduced a new technology called U-VERSE in mid-2010 with an estimated long-term market share of 70%. By January 2011, the market share reached 5% of its peak and by April 2013 it reached 45% of its peak. The company's technology plan calls for starting R&D for the next technology 2 years before the current technology reaches its peak market share. The assignment is to determine the year the market share will peak, generate an S-curve from 2013-peak year+2, and calculate break-even point and profit/loss from 2013-2017 based on demand, costs, and a 2017 sale price.

Uploaded by

Faisal Saleh Raza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

ASSIGNMENT. ISEN4821. S-Curve for forecasting.

The XYZ company introduced the new technology (currently advertised as U-


VERSE) in mid- 2010. At the time, the company estimated that their new
technology will have a long-term market share of 70% (i.e. M=70%).
According to the company’s records, by January 1st, 2011, its market share
had reached 5% of its peak, and it reached to 45% of its peak by April first
2013. The company's long-term technology plan calls for starting R&D
activities for new technology 2 years before the current technology reaches
its peak (or within 1% of its peak).

PART I: Determine
1)- The calendar year (call this X) the company's market share will reach its
expected peak, and the year R&D activities for the next technology
should start
2)- Use a time unit of 1 quarter (0.25 year), calculate the market share for
each period, from 2013 to year X+2, and graph the corresponding S-
Curve.

PART II:
When the technology was introduced, using historical data for similar
products, it was determined that:
A)- Demand for the product in year T will increase for some time in the
future and could be estimated using the following equation.
Yearly demand in million units, D(t) = 0.85*(T-2010)2 +0.5
B)-The company will realize a long-term average revenue of $120 per unit.
C)- Total Cost of R&D activities, promoting the technology, introduction and
other expenses, will be decided from the following equation
Total costs in million-dollar, TC = 180+50*(T-2010.5) +0.8

Using the information provided, determine


1)- How long will it take the company to recover its investment and start
generating profit. (This is called Break-Even -Point)
2)- Suppose at the end of year 2017, the company sales the technology for
$400 Mil. to a competitor, Generate profit or loss for the company from
the year 2013 to the end of 2017. What was the net financial outcome of
the technology?
Assignment help: General methodology

In this type of forecasting assignment, you need to proceed as follows


1)- determine α and To from the data for initial n quarts provided. Note that
unit of time is always a quarte
2)- start spreadsheet with first column as the time. Start this column with first
quarter you have data for or To, whichever is smaller

3)- In the next column generate the market share using the equation 1 (see the
tutorial on S-curve Forecasting)
4)- in the next few columns generate D(t) and TC based on column 1 data.

5) For each quarter (or t value):


Revenue= (Market share) x (Total demand) x (price per unit)
Total cost. Calculated from TC equation
Profit = Revenue -cost
Others: Need to extract from the output data
Note: When the calculated market share gets close to M, the output will get
closer to M (in very small increments) but will never assume a value =M. So
as soon as the calculated market shar get within 0.25 points of M, you should
stop the simulation.

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