Profit in store vs e-shop - Revision history

Ploo00 at 23:01, 25 January 2023

2023-01-25T23:01:18Z

Ploo00 at 23:00, 25 January 2023

2023-01-25T23:00:01Z

Ploo00 at 22:48, 25 January 2023

2023-01-25T22:48:58Z

Ploo00 at 22:03, 25 January 2023

2023-01-25T22:03:08Z

Ploo00 at 19:45, 25 January 2023

2023-01-25T19:45:19Z

Ploo00: Created page with "== 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 su..."

2023-01-25T19:24:25Z

Created page with "== 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 su..."

New page

== 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 '''
= revenue - cost
Units: CZK

''' Cost '''
= fixed cost e-shop + fixed cost store + variable cost e-shop + variable cost store
Units: CZK

''' Revenue '''
= revenue e-shop + revenue store
Units: CZK

''' Fixed cost e-shop '''
= salary * employments e-shop
Units: CZK

''' Fixed cost store '''
= salary * employments store + building rent
Units: CZK

''' Variable cost e-shop '''
= 5000 + advertising budget + gifts + sales
Units: CZK

''' Variable cost store '''
= 5000 + gifts + sales
Units: CZK

''' Building rent '''
= 50000 + parking
Units: CZK

''' Salary '''
= 25000 * opening hours
Units: CZK

''' Employments store '''
= 15

''' Employments e-shop '''
= 1

''' Opening hours '''
= IF THEN ELSE(holiday=1, 1.25 , 1 )

''' Holiday '''
= RANDOM UNIFORM(0, 1, 1)

''' Parking '''
= 5000
Units: CZK

''' Revenue e-shop '''
= price * quantity sold e-shop * (1+(advertising budget-0.5))
Units: CZK

''' Revenue store '''
= price * quantity sold store * (1+(advertising budget-0.5))
Units: CZK

''' Quantity sold e-shop '''
= 5000
Units: m^3

''' Quantity sold store '''
= 3000
Units: m^3

''' Price '''
= 150 + delivery
Units: CZK

''' Delivery '''
= 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 '''
= RANDOM UNIFORM(1, 500, 1)
Units: kg

''' Order cost '''
= RANDOM NORMAL(200, 100000 , 5000 , 2000, 1000)
Units: CZK

''' Gifts '''
= IF THEN ELSE(order cost>2000, 500, 0 )
Units: CZK

''' Sales '''
= 1-0.1
Units: CZK

''' Customer satisfaction '''
= customer satisfaction grow

''' Customer satisfaction grow '''
= customer satisfaction e-shop + customer satisfaction store

''' Customer satisfaction e-shop '''
=
Units:

''' Customer satisfaction store '''
=
Units:

== Model ==

== Results ==

== Conclusion ==

← Older revision		Revision as of 23:01, 25 January 2023
Line 212:		Line 212:
	---		---

−	In the graphs below we can see the revenue of the e-shop and store apart in more detail. On the graphs can be seen how e-shop revenue is influenced by ~~more variables~~.	+	In the graphs below we can see the revenue of the e-shop and store apart in more detail. On the graphs can be seen how e-shop revenue is influenced by advertisement.

@@ Line 210: / Line 210: @@
 [[File:Revenue.png|Company's revenue]]  [[File:Cost.png|Comapny's costs]]
 == Conclusion ==
-The final model is not ideal. It is hard to find all variables, that influence company's profit, especially if we are taking into account customers' satisfaction. The simulation does not count some important variables such as the costs that the company needs to spend to buy new carpets, for example.
+The final model is not ideal. It is hard to find all variables, that influence company's profit, especially if we are taking into account customers' satisfaction. The simulation does not count some important variables such as the costs that the company needs to spend to buy new carpets, for example. According to the model we can say, that the profit is better at e-shop, even though customer satisfaction is higher at the store. The reason for that is probably advertisement which is increasing the sales on e-shop.

@@ Line 54: / Line 54: @@
 the amount of money allocated by a business for promoting its products. The company is advertising through Google Ads and pays for each click.
-  = RANDOM UNIFORM(20, 1000 , 50 )*25
+  = RANDOM UNIFORM(20, 1000 , 50 )*15
   Units:  CZK
@@ Line 96: / Line 96: @@
 ''' Revenue e-shop '''
-the amount of money earned from an e-shop.
+the amount of money earned from an e-shop. The company's revenue always increases by 20% spent on advertisements.
-  = price * quantity sold e-shop * (1+(advertising budget-0.5)) * customer satisfaction e-shop
+  = price * quantity sold e-shop * customer satisfaction e-shop + (advertising budget*0.2)
   Units: CZK
@@ Line 103: / Line 103: @@
 the amount of money earned from a physical store.
-  = price * quantity sold store * (1+(advertising budget-0.5)) * customer satisfaction store
+  = price * quantity sold store * customer satisfaction store
   Units: CZK
@@ Line 193: / Line 193: @@
 If the store works on holidays, it will increase revenue by 5%.
-If the store has gifts, parking, working on holidays, and a 10-20% discount, the revenue will increase by 12%. If the store has gifts and a 30% discount, the revenue will increase by 24%. If the store has gifts, parking, working on holidays, and a 30% discount, the revenue will increase by 34%.
+If the store has gifts, parking, working on holidays, and a 10-20% discount, the revenue will increase by 19%. If the store has gifts, parking, working on holidays, and a 30% discount, the revenue will increase by 29%.
-  = IF THEN ELSE( (IF THEN ELSE(parking=5000, 1.02 , 1 ) + IF THEN ELSE(opening hours=1.05, 1.1 , 1 ) + IF THEN ELSE(gifts=500, 1.02 , 1 ) + IF THEN ELSE(discount<0.7, 1 , IF THEN ELSE(discount>0.7 :AND: discount<0.8, 1.2 , 1.1 ) ) )= 1.24 , 1.24 , 1.34)
+  = IF THEN ELSE( (IF THEN ELSE(parking=5000, 1.02 , 1 ) + IF THEN ELSE(opening hours=1.25, 1.05 , 1 ) + IF THEN ELSE(gifts=500, 1.02 , 1 ) + IF THEN ELSE(discount<0.7, 1 , IF THEN ELSE(discount>0.7 :AND: discount<0.8, 1.2 , 1.1 ) ) )= 1.19 , 1.19 , 1.29)
   Units: %
 == Model ==
 == Results ==
 == Conclusion ==

@@ Line 30: / Line 30: @@
 costs that do not change with the level of sales for an e-commerce business.
-  = salary * employments e-shop
+  = salary * employments e-shop + 1000
   Units: CZK
@@ Line 41: / Line 41: @@
 ''' Variable cost e-shop '''
-costs that vary with the level of sales for an e-commerce business.
+costs that vary with the level of sales for an e-shop.
-  = 5000 + advertising budget + gifts + sales
+  = 5000 + advertising budget + gifts + (money paid for discount/2)
   Units: CZK
@@ Line 48: / Line 48: @@
 costs that vary with the level of sales for a physical store
-  = 5000 + gifts + sales
+  = 10000 + gifts + (money paid for discount/2)
   Units:  CZK
@@ Line 54: / Line 60: @@
 the cost of renting a physical location for a business.
-  = 50000 + parking
+  = 80000 + parking
   Units: CZK
@@ Line 66: / Line 72: @@
   the number of employees working in a physical store.
-  = 15
+  = 4
 ''' Employments e-shop '''
@@ Line 91: / Line 97: @@
 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)) * customer satisfaction e-shop
   Units: CZK
@@ Line 97: / Line 103: @@
 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)) * customer satisfaction store
   Units: CZK
@@ Line 103: / Line 109: @@
 the number of products sold by e-shop.
-  = 5000
+  = RANDOM UNIFORM(500, 1000 , 800)
   Units: m^3
@@ Line 109: / Line 115: @@
 the number of products sold by a physical store.
-  = 3000
+  = RANDOM UNIFORM(300, 700, 500 )
   Units: m^3
@@ Line 115: / Line 121: @@
 the amount of money that is charged for a carpet
-  = 150 + delivery
+  = RANDOM UNIFORM(150, 650 , 300)+delivery
   Units: CZK
@@ Line 145: / Line 151: @@
 a reduction in the regular price of a product. The current discount is 10 %
-  = 1-0.1
+  = RANDOM UNIFORM(0.6, 0.9 , 0.7)
   Units: CZK
@@ Line 161: / Line 173: @@
 the degree to which customers are happy with e-shop's products.
-−
-  Units:
+If the store gives gifts, it will increase revenue by 2%.
 ''' Customer satisfaction store '''
 the degree to which customers are happy with a physical store's products.
-−
-  Units:
+If the store has an available parking spot, it will increase revenue by 2%.
 == Model ==

@@ Line 10: / Line 10: @@
 ''' Profit '''
   = revenue - cost
   Units: CZK
 ''' Cost '''
   = fixed cost e-shop + fixed cost store + variable cost e-shop + variable cost store
   Units: CZK
 ''' Revenue '''
   = revenue e-shop + revenue store
   Units: CZK
 ''' Fixed cost e-shop '''
   = salary * employments e-shop
   Units: CZK
 ''' Fixed cost store '''
   = salary * employments store + building rent
   Units: CZK
 ''' Variable cost e-shop '''
   = 5000 + advertising budget + gifts + sales
   Units: CZK
 ''' Variable cost store '''
   = 5000 + gifts + sales
   Units:  CZK
 ''' Building rent '''
   = 50000 + parking
   Units: CZK
 ''' Salary '''
   = 25000 * opening hours
   Units: CZK
 ''' Employments store '''
   = 15
 ''' Employments e-shop '''
   = 1
 ''' Opening hours '''
   = IF THEN ELSE(holiday=1, 1.25 , 1 )
 ''' Holiday '''
   = RANDOM UNIFORM(0, 1, 1)
 ''' Parking '''
   = 5000
   Units: CZK
 ''' Revenue e-shop '''
   = price * quantity sold e-shop * (1+(advertising budget-0.5))
   Units: CZK
 ''' Revenue store '''
   = price * quantity sold store * (1+(advertising budget-0.5))
   Units: CZK
 ''' Quantity sold e-shop '''
   = 5000
   Units: m^3
 ''' Quantity sold store '''
   = 3000
   Units: m^3
 ''' Price '''
   = 150 + delivery
   Units: CZK
 ''' Delivery '''
   = 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 '''
   = RANDOM UNIFORM(1, 500, 1)
   Units: kg
 ''' Order cost '''
   = RANDOM NORMAL(200, 100000 , 5000 , 2000, 1000)
   Units: CZK
 ''' Gifts '''
   = IF THEN ELSE(order cost>2000, 500, 0 )
   Units: CZK
-''' Sales '''
+''' Discount '''
   = 1-0.1
   Units: CZK
 ''' Customer satisfaction '''
   = customer satisfaction grow
 ''' Customer satisfaction grow '''
   = customer satisfaction e-shop + customer satisfaction store
 ''' Customer satisfaction e-shop '''
+  =
   Units:
 ''' Customer satisfaction store '''
+  =
   Units: