Example #1: Volatility

Volatility and Sales Growth Example #1: Volatility

Beginning of Period
Customers in Market	Amt Purch from all Suppliers	Primary Supplier	Primary Supplier % of Cust Purch	Units of Sale by Primary Supp	Secondary Supplier	Secondary Supp % of Cust Purch	Units of Sale by Secondary Supp
Customer A	1500	Supplier 1	60%	900	Supplier 2	40%	600
Customer B	1200	Supplier 1	80%	960	Supplier 2	20%	240
Customer C	1000	Supplier 2	50%	500	Supplier 3	50%	500
Customer D	0	None	0%	0	None	0%	0
Total	3700			2360			1340
Suppliers in Market	Amount Sold	% Total Market Share
Supplier 1	1860	50.3%
Supplier 2	1340	36.2%
Supplier 3	500	13.5%
Total	3700	100.0%
End of Period
Customers in Market	Amt Purch from all Suppliers	Primary Supplier	Primary Supplier % of Cust Purch	Units of Sale by Primary Supp	Secondary Supplier	Secondary Supp % of Cust Purch	Units of Sale by Secondary Supp
Customer A	1500	Supplier 1	75%	1125	Supplier 2	25%	375
Customer B	1200	Supplier 1	80%	960	Supplier 2	20%	240
Customer C	1000	Supplier 2	50%	500	Supplier 3	50%	500
Customer D	0	None	0%	0	None	0%	0
Total	3700			2585			1115
Suppliers in Market	Amount Sold	% Total Market Share
Supplier 1	2085	56.4%
Supplier 2	1115	30.1%
Supplier 3	500	13.5%
Total	3700	100.0%
*Summary of Changes During Period*
Supplier	Change in Unit Sales Volume	% Volume Change from Beginning to End	Net Unit Volatility in Volume Change	Volatility as % of Unit Sales Volume Change	Customer Growth in Volume Change	Customer Growth as % of Unit Sales Volume Change
Supplier 1	225	12.1%	225	100%	0	0%
Supplier 2	-225	-16.8%	-225	100%	0	0%
Supplier 3	0	0.0%	0	0%	0	0%
Total	0	0.0%	0	0%	0	0%

Explanation: In this example, Customer A increased the percentage of its purchases from Supplier 1 from 60% to 75% and reduced its purchases from Supplier 2 from 40% to 25%. This is an example of Volatility in the marketplace. A customer changed its percentage allocation of its purchases from one supplier to another. Company 1 and Company 2 were both affected by this Volatility event:

Company 1 experienced Positive Volatility because it gained sales volume in the Volatility event.
Customer 2 experienced Negative Volatility because it lost sales volume in the Volatility event.

The market as a whole has no net unit Volatility because no customer entered or left the market. The market had Positive Volatility of 225 units and Negative Volatility of 225 units.