Difference between revisions of "Profit in store vs e-shop"
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''' Profit ''' | ''' Profit ''' | ||
| + | |||
| + | the amount of money a business makes after all of its expenses have been paid. | ||
= revenue - cost | = revenue - cost | ||
Units: CZK | Units: CZK | ||
''' Cost ''' | ''' Cost ''' | ||
| + | |||
| + | the amount of money that is required to acquire a product or to raise customers' satisfaction. | ||
= fixed cost e-shop + fixed cost store + variable cost e-shop + variable cost store | = fixed cost e-shop + fixed cost store + variable cost e-shop + variable cost store | ||
Units: CZK | Units: CZK | ||
''' Revenue ''' | ''' Revenue ''' | ||
| + | |||
| + | the amount of money a business earns from its sales. | ||
= revenue e-shop + revenue store | = revenue e-shop + revenue store | ||
Units: CZK | Units: CZK | ||
''' Fixed cost e-shop ''' | ''' Fixed cost e-shop ''' | ||
| + | |||
| + | costs that do not change with the level of sales for an e-commerce business. | ||
= salary * employments e-shop | = salary * employments e-shop | ||
Units: CZK | Units: CZK | ||
''' Fixed cost store ''' | ''' Fixed cost store ''' | ||
| + | |||
| + | costs that do not change with the level of sales for a physical store. | ||
= salary * employments store + building rent | = salary * employments store + building rent | ||
Units: CZK | Units: CZK | ||
''' Variable cost e-shop ''' | ''' Variable cost e-shop ''' | ||
| + | |||
| + | costs that vary with the level of sales for an e-commerce business. | ||
= 5000 + advertising budget + gifts + sales | = 5000 + advertising budget + gifts + sales | ||
Units: CZK | Units: CZK | ||
''' Variable cost store ''' | ''' Variable cost store ''' | ||
| + | |||
| + | costs that vary with the level of sales for a physical store | ||
= 5000 + gifts + sales | = 5000 + gifts + sales | ||
Units: CZK | Units: CZK | ||
''' Building rent ''' | ''' Building rent ''' | ||
| + | |||
| + | the cost of renting a physical location for a business. | ||
= 50000 + parking | = 50000 + parking | ||
Units: CZK | Units: CZK | ||
''' Salary ''' | ''' Salary ''' | ||
| + | |||
| + | the amount of money that is paid to an employee for their work. | ||
= 25000 * opening hours | = 25000 * opening hours | ||
Units: CZK | Units: CZK | ||
''' Employments store ''' | ''' Employments store ''' | ||
| + | |||
| + | the number of employees working in a physical store. | ||
= 15 | = 15 | ||
''' Employments e-shop ''' | ''' Employments e-shop ''' | ||
| + | |||
| + | he number of employees working in an e-shop. | ||
= 1 | = 1 | ||
''' Opening hours ''' | ''' Opening hours ''' | ||
| + | |||
| + | the time when a business is open. If there is a holiday the store is open and employees will get a +25% to their salary. | ||
= IF THEN ELSE(holiday=1, 1.25 , 1 ) | = IF THEN ELSE(holiday=1, 1.25 , 1 ) | ||
''' Holiday ''' | ''' Holiday ''' | ||
| + | |||
= RANDOM UNIFORM(0, 1, 1) | = RANDOM UNIFORM(0, 1, 1) | ||
''' Parking ''' | ''' Parking ''' | ||
| + | |||
| + | the availability of parking for customers at a physical location. | ||
= 5000 | = 5000 | ||
Units: CZK | Units: CZK | ||
''' Revenue e-shop ''' | ''' Revenue e-shop ''' | ||
| + | |||
| + | the amount of money earned from an e-shop. | ||
= price * quantity sold e-shop * (1+(advertising budget-0.5)) | = price * quantity sold e-shop * (1+(advertising budget-0.5)) | ||
Units: CZK | Units: CZK | ||
''' Revenue store ''' | ''' Revenue store ''' | ||
| + | |||
| + | the amount of money earned from a physical store. | ||
= price * quantity sold store * (1+(advertising budget-0.5)) | = price * quantity sold store * (1+(advertising budget-0.5)) | ||
Units: CZK | Units: CZK | ||
''' Quantity sold e-shop ''' | ''' Quantity sold e-shop ''' | ||
| + | |||
| + | the number of products sold by e-shop. | ||
= 5000 | = 5000 | ||
Units: m^3 | Units: m^3 | ||
''' Quantity sold store ''' | ''' Quantity sold store ''' | ||
| + | |||
| + | the number of products sold by a physical store. | ||
= 3000 | = 3000 | ||
Units: m^3 | Units: m^3 | ||
''' Price ''' | ''' Price ''' | ||
| + | |||
| + | the amount of money that is charged for a carpet | ||
= 150 + delivery | = 150 + delivery | ||
Units: CZK | Units: CZK | ||
''' Delivery ''' | ''' Delivery ''' | ||
| + | |||
| + | the delivery cost depends on the order weight. If the order cost is more, than 5000 CZK then the delivery is free. | ||
= IF THEN ELSE(order cost>5000, 0 , IF THEN ELSE(order weight<5, 159 , IF THEN ELSE(order weight>5 :AND: order weight<15, 289 , IF THEN ELSE(order weight>15 :AND: order weight<30, 399 , IF THEN ELSE(order weight>30 :AND: order weight<50, 599 , IF THEN ELSE(order weight>50 :AND: order weight<75, 799 , IF THEN ELSE(order weight>75 :AND: order weight<100, 999 , IF THEN ELSE(order weight>100 :AND: order weight<150, 1389 , IF THEN ELSE(order weight>150 :AND: order weight<300, 1649 , IF THEN ELSE(order weight>300 :AND: order weight<400, 1749 , 1979 ) ) ) ) ) ) ) ) ) ) | = IF THEN ELSE(order cost>5000, 0 , IF THEN ELSE(order weight<5, 159 , IF THEN ELSE(order weight>5 :AND: order weight<15, 289 , IF THEN ELSE(order weight>15 :AND: order weight<30, 399 , IF THEN ELSE(order weight>30 :AND: order weight<50, 599 , IF THEN ELSE(order weight>50 :AND: order weight<75, 799 , IF THEN ELSE(order weight>75 :AND: order weight<100, 999 , IF THEN ELSE(order weight>100 :AND: order weight<150, 1389 , IF THEN ELSE(order weight>150 :AND: order weight<300, 1649 , IF THEN ELSE(order weight>300 :AND: order weight<400, 1749 , 1979 ) ) ) ) ) ) ) ) ) ) | ||
Units: CZK | Units: CZK | ||
''' Order weight ''' | ''' Order weight ''' | ||
| + | |||
| + | the weight of an order placed by a customer. | ||
= RANDOM UNIFORM(1, 500, 1) | = RANDOM UNIFORM(1, 500, 1) | ||
Units: kg | Units: kg | ||
''' Order cost ''' | ''' Order cost ''' | ||
| + | |||
| + | the cost of processing and fulfilling an order placed by a customer. | ||
= RANDOM NORMAL(200, 100000 , 5000 , 2000, 1000) | = RANDOM NORMAL(200, 100000 , 5000 , 2000, 1000) | ||
Units: CZK | Units: CZK | ||
''' Gifts ''' | ''' Gifts ''' | ||
| + | |||
| + | items that are given to customers as part of a promotion. If the order cost is bigger than 2000, customers will get a gift, which cost 500 CZK. | ||
= IF THEN ELSE(order cost>2000, 500, 0 ) | = IF THEN ELSE(order cost>2000, 500, 0 ) | ||
Units: CZK | Units: CZK | ||
| − | ''' | + | ''' Discount ''' |
| + | |||
| + | a reduction in the regular price of a product. The current discount is 10 % | ||
= 1-0.1 | = 1-0.1 | ||
Units: CZK | Units: CZK | ||
''' Customer satisfaction ''' | ''' Customer satisfaction ''' | ||
| + | |||
| + | the degree to which customers are happy with a business's products. | ||
= customer satisfaction grow | = customer satisfaction grow | ||
''' Customer satisfaction grow ''' | ''' Customer satisfaction grow ''' | ||
| + | |||
| + | the increase in customer satisfaction over time. | ||
= customer satisfaction e-shop + customer satisfaction store | = customer satisfaction e-shop + customer satisfaction store | ||
''' Customer satisfaction e-shop ''' | ''' Customer satisfaction e-shop ''' | ||
| + | |||
| + | the degree to which customers are happy with e-shop's products. | ||
= | = | ||
Units: | Units: | ||
''' Customer satisfaction store ''' | ''' Customer satisfaction store ''' | ||
| + | |||
| + | the degree to which customers are happy with a physical store's products. | ||
= | = | ||
Units: | Units: | ||
Revision as of 20:45, 25 January 2023
Problem definition
An unnamed company that sells carpets has its own store in Prague. During COVID-19 the company reopened an e-shop, so it currently has two mutually supporting sales channels. Both types of stores have their advantages and disadvantages. At the same time, there are various factors that affect the profit. Examples of these factors are the following: customer satisfaction and needs (carpet quality, order processing speed, price, etc.), expenses (advertising, rent, employees, etc.), the possibility of expansion, etc. To ensure customer satisfaction the company should make some expenses.
The goal of this simulation is to find out what parameters can increase profit the most (individually for each type of store), to find a balance between expenses to satisfy the customers in order to achieve the profit, and in the end to compare these parameters.
Method
The Vensim program is used as a modeling tool, which makes it possible to display and simulate the dynamics of the entire system.
Variables
Profit
the amount of money a business makes after all of its expenses have been paid.
= revenue - cost Units: CZK
Cost
the amount of money that is required to acquire a product or to raise customers' satisfaction.
= fixed cost e-shop + fixed cost store + variable cost e-shop + variable cost store Units: CZK
Revenue
the amount of money a business earns from its sales.
= revenue e-shop + revenue store Units: CZK
Fixed cost e-shop
costs that do not change with the level of sales for an e-commerce business.
= salary * employments e-shop Units: CZK
Fixed cost store
costs that do not change with the level of sales for a physical store.
= salary * employments store + building rent Units: CZK
Variable cost e-shop
costs that vary with the level of sales for an e-commerce business.
= 5000 + advertising budget + gifts + sales Units: CZK
Variable cost store
costs that vary with the level of sales for a physical store
= 5000 + gifts + sales Units: CZK
Building rent
the cost of renting a physical location for a business.
= 50000 + parking Units: CZK
Salary
the amount of money that is paid to an employee for their work.
= 25000 * opening hours Units: CZK
Employments store
the number of employees working in a physical store. = 15
Employments e-shop
he number of employees working in an e-shop.
= 1
Opening hours
the time when a business is open. If there is a holiday the store is open and employees will get a +25% to their salary.
= IF THEN ELSE(holiday=1, 1.25 , 1 )
Holiday
= RANDOM UNIFORM(0, 1, 1)
Parking
the availability of parking for customers at a physical location.
= 5000 Units: CZK
Revenue e-shop
the amount of money earned from an e-shop.
= price * quantity sold e-shop * (1+(advertising budget-0.5)) Units: CZK
Revenue store
the amount of money earned from a physical store.
= price * quantity sold store * (1+(advertising budget-0.5)) Units: CZK
Quantity sold e-shop
the number of products sold by e-shop.
= 5000 Units: m^3
Quantity sold store
the number of products sold by a physical store.
= 3000 Units: m^3
Price
the amount of money that is charged for a carpet
= 150 + delivery Units: CZK
Delivery
the delivery cost depends on the order weight. If the order cost is more, than 5000 CZK then the delivery is free.
= IF THEN ELSE(order cost>5000, 0 , IF THEN ELSE(order weight<5, 159 , IF THEN ELSE(order weight>5 :AND: order weight<15, 289 , IF THEN ELSE(order weight>15 :AND: order weight<30, 399 , IF THEN ELSE(order weight>30 :AND: order weight<50, 599 , IF THEN ELSE(order weight>50 :AND: order weight<75, 799 , IF THEN ELSE(order weight>75 :AND: order weight<100, 999 , IF THEN ELSE(order weight>100 :AND: order weight<150, 1389 , IF THEN ELSE(order weight>150 :AND: order weight<300, 1649 , IF THEN ELSE(order weight>300 :AND: order weight<400, 1749 , 1979 ) ) ) ) ) ) ) ) ) ) Units: CZK
Order weight
the weight of an order placed by a customer.
= RANDOM UNIFORM(1, 500, 1) Units: kg
Order cost
the cost of processing and fulfilling an order placed by a customer.
= RANDOM NORMAL(200, 100000 , 5000 , 2000, 1000) Units: CZK
Gifts
items that are given to customers as part of a promotion. If the order cost is bigger than 2000, customers will get a gift, which cost 500 CZK.
= IF THEN ELSE(order cost>2000, 500, 0 ) Units: CZK
Discount
a reduction in the regular price of a product. The current discount is 10 %
= 1-0.1 Units: CZK
Customer satisfaction
the degree to which customers are happy with a business's products.
= customer satisfaction grow
Customer satisfaction grow
the increase in customer satisfaction over time.
= customer satisfaction e-shop + customer satisfaction store
Customer satisfaction e-shop
the degree to which customers are happy with e-shop's products.
= Units:
Customer satisfaction store
the degree to which customers are happy with a physical store's products.
= Units:
