Example #3: Company Volatility

Volatility and Sales GrowthExample #3: Company Volatility

Yellow Highlighting=Change from Beginning of Period

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	80%	1200	Supplier 2	20%	300
Customer B	1200	Supplier 1	50%	600	Supplier 2	50%	600
Customer C	1000	Supplier 2	50%	500	Supplier 3	50%	500
Customer D	0	None	0%	0	None	0%	0
Total	3700			2300			1400
Suppliers in Market	Amount Sold	% Total Market Share
Supplier 1	1800	48.6%
Supplier 2	1400	37.8%
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	-60	-3.2%	-60	100%	0	0%
Supplier 2	60	4.5%	60	100%	0	0%
Supplier 3	0	0.0%	0	0%	0	0%
Total	0	0.0%	0	0%	0	0%

Explanation: We will look at the transactions between Supplier 1 and Customers A and B. During the period, Customer A increased Supplier 1's total purchase allocation percentage from 60% to 80%. This produced Positive Volatility for Suppler 1 of 300 units. During the same period, Customer B reduced its allocation of purchases to Supplier 1 from 80% to 50%. This produced Negative Volatility of 360 units for Supplier 1. As a result of these two events, Supplier 1's Net Volatility is Negative by 60 units The 360 units of sale it lost from Customer B was greater than the 300 units it gained from Customer A.