FORWARD SOFTWARE RISK MANAGEMENT SUBMISSION
0244 0244/5 /53 3
NAV NAVIN PRAJ PRAJAP APA ATI
0253 0253/5 /53 3
NISA NISARG RG NA NAYAN SWA SWALY
0270 0270/5 /53 3
PATIL MAND MANDAR AR MANO MANOHA HAR R
0284/ 284/5 53
PRAS PRASHA HANT NT KUMA KUMAR R
0302/53
RAHUL JAIN
0303/53
RAHUL KUMAR
I NTRODUCTI ON
Foc usABC,as pr ead s he etpr o duc tl au nc he db yf o cu ss of t war ei samar k e tl ea deri ns pr ea ds he et sof t war e,hol di ng 80 per centofmar ketshar e.Key USPs ofFocus ABC i ncl ude a one l i ner e xpl anat i onofopt i ons ,auni quemenus y s t em,andandabi l i t yt oc r eat emac r os .Thes hor t c omi ngs o ft h ep r o gr a mi n c l u deu s ag eo fafl o pp yd i s kt ol a un c ht h ep r o gr a ma ndp r i n t i n gi s s u es .Th e pr oduc thadal i s tpr i c eof$495andbes tdi s c ount edpr i c eof$300. Di s c ounts of t war el a unc hedas pr ead s he etpr ogr am,VI PSc hed ul er ,t oc omp et ewi t hFo cu s ’ sABC wi t hal i s tpr i c eof99$.I thadamenuwhi c hwasi dent i c alt ot hatofFoc us ’ s .Howev er ,i tf ac ed r el i abi l i t yi s suesandus er spr ef er r edt os t aywi t ht hepopul arnameofFoc us . Ci nc owasl aunc hedb yFor war ds of t war eandhadbe t t erpr i nt i ngi nt egr at i on,wasmor ei nt ui t i v e , and had backwar d compat i bi l i t y wi t h Focus ABC.I thad t wo menu sy st ems,ofone whi ch r es embl edFoc us ’ sABC.I twashai l edb yc r i t i c sandqui c k l ygai nedmar k ets har e. Di s c ountSof t war ewa ss ue db yFoc uso v erc op y r i ghti n f r i n gementont hel o okan df e eloft he menuofVI P Schedul erwhi chcl osel yr esembl ed t hatofFocusABC.Sam El l i s,t he CEO of For wa r ds o f t wa r eb el i e v e st h atFo r wa r d Sh ar ei st h er e alt a r g eto fFo c usSo f t wa r e . He h as v ar i ousopt i onsbef or ehi m.Hec anpr oc eedwi t hanoutofc our ts et t l ementwi t hFoc usbef or et he r es ul t sofFoc us Di s countSof t war el i t i gat i oni sr el eas ed.Orhec anwai tf ort her es ul t s ,af t erwhi c h i nc as eFoc usl os eshewoul dbes af e.Buti fFoc uswi ns ,hehasanopt i ont oei t hergot oc our tor s et t l eoutoft hec our t .Al lt hes eopt i onshav edi ff er entc os tbenefi t sas s oc i at edwi t ht hem andhe ha st oc hoo s et h eop t i ma lo ne . Al s o,hehasanopt i onofhi r i ngane xt er nall aw fi r mt opr edi c tt hec our tr ul i ngofFoc us Di s c ount Sof t war el i t i gat i on.Ofc our s e,t hes er v i c esofl a wfi r mc omeatac os tof$0. 7MN.Heal s ohast o dec i dewhet hert heoff eroft hel awf or mi swor t ht hec os tornot . PROBLEM ST AT EMENT
1 .Fo r wa r d ’ sCEO h ast od ec i d ewh et h ert omo v ea he adwi t ho uto fc o ur ts e t t l e me ntwi t hFo c us now orwai tf ort her es ul tofFoc us Di s countc as e.I fhewai t sf ort her es ul toft hec as e,hehas t odec i dewhet hert ogof oroutofc our ts et t l ementorpr oc eedwi t hi nc our tc as ei fFoc us d ec i de st os ue. 2.Sam h ast od ec i dewhe t h ert op ayt h eas k i ngp r i c eof$0. 7MNt ot hel a wfi r mf orpr edi c t i ngt h e out c omeofFoc us Di s c ountc as eandwhatwoul dbet heac c ept abl epr i c ef ort hei rs er v i c es .
RECOMMENDAT I ONS
1.Theopt i mals t r at egyf orFor war ds of t war ewoul dbet ono thi r et hel a wfi r m.Hi r i ngt heLa wfi r m wo ul dc os th i m $4 . 6 3MNa ga i n s tn oth i r i n gwh i c hwo ul dc o s th i m $4 . 5MN. 2.Af t erno thi r i ngt hel a wfi r m,For war ds houl dmo v eaheadwi t has t r at egyofwai t i ngt heout c ome ofFoc us Di s c ountc as ewhi c hwoul dc os ti t$4. 5MN agai ns ts et t l i ngout s i det hec our tnow wh i c hwoul dc os ti t$8. 3MN. 3 .I ft h eo ut c o meo fFo c us Di s c o un tc a s ei si nf a v o ro fFo c usa ndi td ec i d est os u e Fo r wa r d , For war ds houl ds et t l et he c as e outofc our t( c os tofout of c our ts et t l ementi s$ 12. 5 MN agai ns t$15. 62MNf ort r i al . BASI CTREEDI AGRAM ANDANAL YSI S
Thebas i ct r eedi agr am f ort hec as ewhenSam El l i sdoesnothi r et hel a wfi r mi spr es ent edbel o w. Thec ompl et edec i s i ont r eei sat t ac hedi nt heex c el s heet .
CONDI T I ONALPROBABI L I T I E S
P(Legal suit against Forar!"
#$#%
P(No legal Suit against Forar!"
#$&'
P(La Pre!iting Fous Win"
#$)'
P(No legal suit against *orar! it+ PI"
#$'%
P(Fous Atuall, Wins - La Fir. /re!iting Winning" P(Fous Atuall, Loses - La Fir. /re!iting losing"
0 #$1%)23
P(Fous Atuall, Losing - La Fir. /re!iting Fous inning
#$#%
P(Fous Atuall, Wins -La Fir. /re!iting Fous losing
#$'%
P(La 4r. /re!iting Fous L - Fous Atuall, inning" P(La 4r. /re!its Fous Winning -Fous Atuall, losing"
0 #$5
P(Fous Atuall, Win - La 4r. /re!its Fous Winning"
#$1320%5132
P(Fous Atuall, Lose - La 4r. /re!its Fous Losing"
#$&)0#)%%1)
P(Fous Atuall, Losing - La 4r. /re!its Fous Winning
#$0%51320%)
P(Fous Atuall, Winning - La 4r. /re!its Fous Losing
#$#'1&'3302
P(La Pre!iting Fous Wins"
#$%5
P(No Suit Forar! it+ PI"
#$31
P(Fous Atuall, Losing - La 4r. /re!its Fous Winning
#$#%
P(Fous Atuall, Winning - La 4r. /re!its Fous Losing
#$'%
COSTANAL YSI SOFHI RI NG THEOUTSI DELAW FI RM
1.Asi sev i d entf r o mt het r e edi a gr a m For wa r ds h ou l dp r o ce eda headwi t h outh i r i ngt h el a wfi r m. Hi r i n gt h el a wfi r m wo ul dc os tFor war d$4 . 63 6MN a sa ga i n s tno th i r i ngwh i c hwo ul dc os ti t$ 4. 5MN. 2.Thedi ffer encei s$0. 136MN.For war dshoul dnothi r et hefir m at$0. 7MN makeacount er offerof$0. 564MN( 0. 7MN–0. 136MN) . 3.I nc as ef oc ushi r est hef or m,t heni ft hef or m pr edi c t st hatFoc uswoul dwi nt heFoc us Di s c ount c as et henFor war ds houl dl ookf or war dt o outofc our ts et t l ement .I ft hef or m pr edi c t st hat Foc uswoul dl os et henFor war ds houl dwai tf ort heout c omeoft her es ul t . S ENS I T I V I T YOFI NF ORMA T I ONT OP RE DI CT I ONA CCURACY
I nt hec ur r ent l ys t at eds c enar i ot hel a wfi r ms houl dnotbehi r ed,howev ert hi sr es ul ti sbas edona pr edi c t i onbei ng90per c entac c ur at e.Thepr edi c t i onac c ur ac yhowev er ,c anv ar yf r om 0per c entt o 10 0p er c ent .Thee x pec t e dc os tag ai ns tt heac c ur a cyofi nf o r mat i o no ft hel a wfi r mi sc ha r t ed b el o w.
I ni t i al l yt hec os tofhi r i ngt hefi r mr emai nsc ons t antat$5. 2MN.Af t ert hepr obabi l i t yof0. 807t he c os ts t ar t sd ec r eas i n gl i ne ar l yr ea chi ng t he mi ni mum of$ 4. 02 MN atp er f ec ta cc ur a cy .The e xpec t edc os tofno thi r i ngt hefi r mi s$4. 5MN,s oasl ongast hehi r i ngt hef or mc os t smor et han t han ,Fo r war ds hou l dno tg oa headwi t hhi r i ngt hel a wfi r m.Ho we v er ,atpr e di c t i onac c ur ac yof 92. 23per c ent ,t hehi r i ngc os t sar eequalt onothi r i ngc os t sandatal ev elofac cur ac yhi ghert han t hatFor war ds houl dgoaheadwi t hhi r i ngt hee xt er nal l a wfi r m. At9 0p er c en ta cc ur ac yt h el a wfi r mi sc har gi ng$0. 7MN.Th epo t e nt i a lc os ts a v i ng satp er f e ct i n f o r mat i onl e v eli s$0. 4 8MN ( 4 . 5MN4. 02MN) .Th uswec anc o nc l u det ha tt h ec os tofper f e ct i nf or mat i oni s$1. 18MN. PROBABL I T YDI ST RI BUT I ONANDSENSI T I VI T YANAL Y SI SOPT I MAL
Thec os tofs et t l i ngout s i det hec our ti nopt i mum s t r at egyi s ; Cos tf ors et t l ement $9. 2MN $12. 2MN $16. 2MN
Pr ob. 0. 3 0. 4 0. 3
F OCUSWI NNI NG THECASEAGAI NSTDI SCOUNT
Thepr obabi l i t yofFoc uswi nni ngt hec as eagai ns tDi s c ounti s0. 4.Howev er ,ast hepr obabi l i t y wi nni ng changest he expect ed cost st obe bor ne byFor war dwoul dal sochange asperbel ow c h a r t .
Ch an ges i nt h e pr o ba bi l i t y off oc us wi n ni n g ag ai ns tDi s c ou ntaff ec t s bo t hd ec i s i o nt r ee so f hi r i ng/ no thi r i ngt hel aw fi r m.Poi nt sofi nfl ec t i onc anbeobs er v edatP~0. 43andP~0. 82.Af t er P~0 . 8 2t hec os ti sc ons t antat$8 . 3MN.
P(Focus win Discount) # #$#3 #$0 #$03 #$5 #$53 #$) #$)3 #$% #$%3 #$3 #$33 #$' #$'3 #$2 #$23 #$1 #$13 #$& #$&3 0
Output Value # #$3'53 0$053 0$'123 5$53 5$1053 )$)23 )$&)23 %$3 3$#5%53 3$%053 3$1##23 '$01& '$32253 '$&'33 2$)3)23 2$2%5 1$0)#53 1$) 1$) 1$)
F OCUSSUI NG F ORWARD
Thepr obabi l i t yofFoc ussui ngFor war di fi twi nsDi s countc as ei s0. 9.Howev er ,ast hepr obabi l i t y wi nni ng changest he expect ed cost st obe bor ne byFor war dwoul dal sochange asperbel ow c h a r t .
3 %$3 % )$3 ) E6/ete! 7osts
5$3 5 0$3 0 #$3 #
Thec os t sr os el i near l yt i l lapr obabi l i t yl ev elof0. 95af t erwhi c hi tbec omesfl at t er ,wi t hav al ueof 4. 686atapr obabi l i t yof100per c ent .
P (Focus going for law suit | Focus winning the case) # #$#3 #$0 #$03 #$5 #$53 #$) #$)3 #$% #$%3 #$3 #$33 #$' #$'3 #$2 #$23 #$1 #$13 #$& #$&3 0
Output Value # #$53 #$3 #$23 0 0$53 0$3 0$23 5 5$53 5$3 5$23 ) )$53 )$3 )$23 % %$53 %$3 %$''0 %$'1'
F OCUSWI NNI NG F ORWARD
Thepr obabi l i t yofFoc ussui ngFor war di fi twi nsDi s countc as ei s0. 8.Howev er ,ast hepr obabi l i t y wi nni ng changest he expect ed cost st obe bor ne byFor war dwoul dal sochange asperbel ow c har t .Ther ewoul dbec hangedi nbot ht hedec i s i ont r ees
3
%$3
%
)$3 s t s o ) 7 ! e t ( e /5$3 6 E
5
0$3
0
#$3 #
#$0
#$5
#$)
#
%$#$3
#$'
#$2
#$1
#$&
0
P(Fous suesan! inso8er Forar!"
Theex pec t edc os t sr i s el i near l yt o$4. 5MN,bec omi ngc ons t antatapr obabi l i t yl ev el of0. 65. P (Focus losing against Forward) # #$#3 #$0 #$03 #$5 #$53 #$) #$)3 #$% #$%3 #$3 #$33 #$' #$'3 #$2 #$23 #$1 #$13 #$& #$&3 0
Output Value #$& 0$0&35 0$%&#% 0$213' 5$#1#1 5$)2' 5$'205 5$&''% )$5'0' )$33'1 )$135 %$0%25 %$%%5% %$3 %$3 %$3 %$3 %$3 %$3 %$3 %$3
