D
Drew
24 Jul 2012 05:15
Link
So the math seems to dictate that Q350 is the best Q to sell at. Before I figured that I misstepped as who knows how TS's were working? Seems players have figured it out though, each product sells at a predetermined level +- the Quality of the product. I don't know the numbers exactly but I'll use Crafty's ammo as it was recent and he used specific #'s.
So if he made ammo at 250, it would sell at 200. As it's a Q-50 sale price. so it's a 200, 50 is sunk, so 200 go to pay all costs associated. At let's say 350 then you should sell at 300 instead to go for paying all costs and securing a profit. 50/200>50/300. A smaller impact on the contribution of the product in regards to proportion. But it is safe to say that other costs are to go up, possibly in material costs but gaurenteed increase in mainteance costs as they require more FMU's.
But their still doesn't seem to be any justification not to produce 350Q items. And Andy you state that nobody wants them but they sell anyways. If the purpose of the broken TS is to stop people from producing too high of quality items, you are going the wrong way!
But alas I haven't accounted for increased costs. So as corps endlessly produce units and they have no finite lifespan I can't exactly incorporate the costs of the intial upgrades but I can try to analyze the costs of the increased maintenance and an estimate on supply costs.
So I compared a TQ 136.3 and a TQ 298.7 Aluminum corp. The difference in Q is 162.4, the corresponding revenues were 3353.23 and 2108.14. a difference of 62.98% while the difference of Q was only 45.6%. So this does show a sinking translation which does mean there is a point of diminishing returns. Well there is if it under 350 anyways. I'm pretty sure it's not but my math will continue. Considering the difference in FMU's is slightly over 100 I will compare that first. Maintenance products used totals 242.8 and 448.3 respectfully. This is an 84.64% increase. This proportion of the difference of the revenue is only 3353.23-2108.14=(205.5)/1245.09= 16.5% indeed significant. However is we consider that the revenue is 45.6% greater-16.5%= The gain is still 29.1%. So in this example each upgrade point increases maintenace costs by .1 or an operating margin of .9. Not bad ;). But this still doesn't consider an increase in supply costs. But as I only have a 32.4m difference in SQ it is incredibly minor U did that math on that one also though seeing a 2% increase with the higher quality item being 45.55% of the revenues it is a very portion but at 2% it will still be an insignificant cost.
The conclusion I get from the data is each upgrade point you buy will see a 90% increase over the added cost of buying a new one. So 90%*90%=81%*90%=72.9%*.9=65.61*.9=59.049... etc. You will see lowering returns but it is an asymptote and will never go negative. So by this logic if you can continue to upgrade Q upgrades you should in fact do it indefinately well if you ignore the intial cost of the investment that is. So going truly public and getting a 250Q product seems the way to go.
Another conclusion I get is that TS may or may not matter but Q doesn't give a static value, essentially the +-10/20/50% under/over quality is flawed as the revenue was increased 62.87%>45.56<-Difference in Q. Showing an extra incentive in increasing Q as high as possible. This can be flawed as my sample is a single comparison. And none of the numbers fell consistant with the original hypothesis.
Finally as the majority of costs are material costs, you should show no regard to the TQ with this but merely which Supply Chain Optimizes each point of quality and will most likely be valid for every Quality level. This is not tested but alas I didn't have a significant change.
This is what I do for a living a can do it pretty fast but determining how to look at the numbers and how to compare the numbers took a bit longer then I anticipated. So my example isn't very good but at least this example shows ME that my hypothesis is probably correct. I also don't have many assorted quality products so it would be hard for me too build an adequate sample even if I wanted to. So here's the thing, I didn't intend on this being advice, I still don't. Don't take my math as fact! The intent is too gather insight of whether or not I'm completely off base. So be brutal with that. The side intent is too show reasonable cause that Andy is dead wrong when he says that making high quality items is wrong. I didn't get to prove that but I'm pretty sure I'm right. So the current trade strategies settings are flawed. If the ideal product quality is closer to 170 then being able to influence prices is imperative for the market to find incentative too make product 170!
Comment as you see fit
So if he made ammo at 250, it would sell at 200. As it's a Q-50 sale price. so it's a 200, 50 is sunk, so 200 go to pay all costs associated. At let's say 350 then you should sell at 300 instead to go for paying all costs and securing a profit. 50/200>50/300. A smaller impact on the contribution of the product in regards to proportion. But it is safe to say that other costs are to go up, possibly in material costs but gaurenteed increase in mainteance costs as they require more FMU's.
But their still doesn't seem to be any justification not to produce 350Q items. And Andy you state that nobody wants them but they sell anyways. If the purpose of the broken TS is to stop people from producing too high of quality items, you are going the wrong way!
But alas I haven't accounted for increased costs. So as corps endlessly produce units and they have no finite lifespan I can't exactly incorporate the costs of the intial upgrades but I can try to analyze the costs of the increased maintenance and an estimate on supply costs.
So I compared a TQ 136.3 and a TQ 298.7 Aluminum corp. The difference in Q is 162.4, the corresponding revenues were 3353.23 and 2108.14. a difference of 62.98% while the difference of Q was only 45.6%. So this does show a sinking translation which does mean there is a point of diminishing returns. Well there is if it under 350 anyways. I'm pretty sure it's not but my math will continue. Considering the difference in FMU's is slightly over 100 I will compare that first. Maintenance products used totals 242.8 and 448.3 respectfully. This is an 84.64% increase. This proportion of the difference of the revenue is only 3353.23-2108.14=(205.5)/1245.09= 16.5% indeed significant. However is we consider that the revenue is 45.6% greater-16.5%= The gain is still 29.1%. So in this example each upgrade point increases maintenace costs by .1 or an operating margin of .9. Not bad ;). But this still doesn't consider an increase in supply costs. But as I only have a 32.4m difference in SQ it is incredibly minor U did that math on that one also though seeing a 2% increase with the higher quality item being 45.55% of the revenues it is a very portion but at 2% it will still be an insignificant cost.
The conclusion I get from the data is each upgrade point you buy will see a 90% increase over the added cost of buying a new one. So 90%*90%=81%*90%=72.9%*.9=65.61*.9=59.049... etc. You will see lowering returns but it is an asymptote and will never go negative. So by this logic if you can continue to upgrade Q upgrades you should in fact do it indefinately well if you ignore the intial cost of the investment that is. So going truly public and getting a 250Q product seems the way to go.
Another conclusion I get is that TS may or may not matter but Q doesn't give a static value, essentially the +-10/20/50% under/over quality is flawed as the revenue was increased 62.87%>45.56<-Difference in Q. Showing an extra incentive in increasing Q as high as possible. This can be flawed as my sample is a single comparison. And none of the numbers fell consistant with the original hypothesis.
Finally as the majority of costs are material costs, you should show no regard to the TQ with this but merely which Supply Chain Optimizes each point of quality and will most likely be valid for every Quality level. This is not tested but alas I didn't have a significant change.
This is what I do for a living a can do it pretty fast but determining how to look at the numbers and how to compare the numbers took a bit longer then I anticipated. So my example isn't very good but at least this example shows ME that my hypothesis is probably correct. I also don't have many assorted quality products so it would be hard for me too build an adequate sample even if I wanted to. So here's the thing, I didn't intend on this being advice, I still don't. Don't take my math as fact! The intent is too gather insight of whether or not I'm completely off base. So be brutal with that. The side intent is too show reasonable cause that Andy is dead wrong when he says that making high quality items is wrong. I didn't get to prove that but I'm pretty sure I'm right. So the current trade strategies settings are flawed. If the ideal product quality is closer to 170 then being able to influence prices is imperative for the market to find incentative too make product 170!
Comment as you see fit