T- Shirt Company Project

Transcription

1 T- Shirt Company Project Problem: Some friends think you should start a t- shirt company. You do some research into the costs you would have. You find a screen printer to purchase on Craig s List for $50. You will need to purchase a stencil for each design you want to make. Finally, you find that including the cost of the shirt and the ink, it costs $3 to print on a white t- shirt, $4 for a grey t- shirt, $5 for basic colors, $6 for neon colors or black. For your first batch of shirts, you will create 3 options that you will test on the market by using a survey: A simple design (8 words or less, no graphic) that costs $10 for the stencil An average design (8 20 words and a simple 1- color graphic) that costs $15 for the stencil A complex design (as many words as you would like and up to 3 colors on the graphic) that costs $40 for the stencil. You will design a business model that considers your costs in making the shirts and your revenue (the amount of money you bring in from selling the shirts). You know you can get a $500 loan to start the business. You will consider whether you can pay it back with 5% interest and how much profit (revenue cost) you could make after paying back your loan. Part 1: Design and cost your shirts Use the following table to organize your information about your designs and their costs. Assume you will only make one of the styles at first, so all of your costs have to be considered in each design. Your designs and cost information are due at the start of class on Tuesday, February 12, What is your shirt design company s name going to be? (2 points) T- Shirt Color White, Grey, Basic Colors, Neon, or Black (0.5 pt each) Design Type Simple, Average or Complex - ONE OF EACH (0.5 pt each) Design Name (Show design on attached pages - 10 pt each) Cost Equation if you only made this style (3 pts each) Initial Run How many t- shirts can you make with a $500 investment? (2 pts each) Style 1 Style 2 Style 3 Part 1 Score: / 50

2 Part 2: Survey your market Your next step is to find out which designs your potential customers like and how much they might pay for them. Create an unbiased survey asking a sample group about the 3 styles you have designed that includes the following information: Style Color Pricing (What s the most they would they pay for it? Give them some options.) Name of person being surveyed Bring your three t- shirt designs, a copy of your printed survey questions, and an answer form that your classmates can fill in during class on Tuesday, February 12, Outside of class you will have to ask additional people to take your survey - - you will need 25 total people in your sample. (Questions 15 pts, Answer sheet 5 pts, Full 25 responses 10 pts.) After you get your survey results, write a few paragraphs explaining what decisions you would make about your designs based on your survey data. Consider the following questions: Would you make any changes to the style or color of any of the designs? What price do you think you can charge for each of your designs? What percentage of your market do you think might buy each design at that price? Which design do you think you would produce first? Why? You may type your analysis and attach it or handwrite it on this page and the next. (Analysis of survey results 20 pts)

3 Part 2 Score: / 50 Part 3: Develop the key equations and analyze the business case (Can only be completed AFTER the entire class has been surveyed Complete by Friday, March 1 st, 2013): Now finalize the style, color, and price you would charge for each design. Use the table below to help organize your business case for making each design. (Updates the first 4 rows based on the results of your survey.) Key Equations (10 pts) Design Name Style 1: Style 2: Style 3: T- Shirt Color White, Grey, Basic Colors, Neon, or Black Design Type Simple, Average or Complex - ONE OF EACH Cost Equation if you only made this style Price you will charge (should be justified by survey results above - 1 pt each) Revenue equation if you only make this style (1 pts each) Profit equation (profit = revenue cost) 1 pts each Loan equation (amount of loan + 5% interest) 1 pt total

4 Graphs Make two graphs to help understand your business. (12 pts total: 6 pts each graph, 2 pts for each style) Graph 1: The breakeven point is the number of t- shirts for which your costs and your revenues are equal. Graph your revenue and cost equations for each t- shirt style (all on one graph, but using different colors or symbols for each style). Find the breakeven point for each style. (Make sure to label axes and lines clearly!) Style 1 Breakeven: Style 2 Breakeven: Style 3 Breakeven: Graph 2: After paying the direct costs of your business you will have to pay your loan back using the profits from your sales. Graph your loan and profit equations for each t- shirt style (all in one graph, using different colors or symbols for each style). How many t- shirts do you have to sell to pay your loan back? (Make sure to label axes and lines clearly!) Style 1 Repayment: Style 2 Repayment: Style 3 Repayment:

5 Business Case Consider the implications of your equations (39 pts) Design Name Style 1: Style 2: Style 3: Initial Run How many t- shirts can you make with a $500 loan? (2 pts each) Breakeven point (When will your revenue equal your costs? Calculate with matrices to confirm your results from the graph.) 4 pts each Loan repayment How many shirts do you have to sell to have enough profit to pay back your loan plus 5% interest? Calculate with algebra to confirm your results from the graph - 4 pts each Your profit If you sell all the t- shirts you can make in your initial run, and pay back your investors, how much profit will be left over for you? 3 pts each

6 Analyze your results (39 pts) (1) What do the slopes and y- intercepts represent in your cost equations? (2 pts) (2) What do the slopes and y- intercepts represent in your revenue equations? (2 pts) (3) What do the slopes and y- intercepts represent in your profit equations? (2 pts) (4) What do the slopes and y- intercepts represent in your loan equation? (2 pts) (5) With an initial loan of $500, can you make enough shirts to break even? Explain. (3 pts) (6) With an initial loan of $500, can you make enough shirts to repay your loan? Will you get to keep any money after you repay the loan? Explain. (4 pts) (7) Does it matter which of your t- shirts you make? Do you make more profit on a simple, low- cost shirt or a fancy, high- cost shirt? (4 pts)

7 (8) Which shirt should you make first? Why? (4 pts) (9) Do you think you should start this business? Why or why not? (4 pts) (10) If you were the bank, would you loan $500 out to someone who wanted to start this business? (4 pts) (11) What would happen if you decided to make two kinds of shirts instead of one? What would you have to change about your equations? What advantages and disadvantages would there be? (4 pts) (12) Based on the results of your work so far, what would you change about your business model if you were to start over? (Different design? Different pricing?) What affects might these changes have on your customers? Explain in at least 1 paragraph. (4 pts) Part 3 Score: / 100

8 Style 1

9 Style 2:

10 Style 3: