CHAPTER EIGHTCASE STUDY 3:The Phone Factory Revisited

8.1 INTRODUCTION

Let us fast-forward the Phone Factory case study by two years. The plant has now been built, and we are ready to start operations. The market for mobile phones has turned out to be much larger than we had initially anticipated (two years ago). As a result, the factory has been built with a much bigger production capacity. Furthermore, demand for mobile phone handsets is so strong that the starting selling price is 50 percent higher than we had initially forecast. Sales are forecast to reach $6 million for the first year (about 30,000 handsets sold at an average of $200).

With the factory now up and running, your manager has asked for a revised 10-year financial model setting ...

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