Supply Chain Management

Global Supply Chain Management Game- 2

Year 1

Design room

• Wifi and color don’t add to the profit but increase the demand by 1k each, but the variation in the estimations is high when adding wifi. Hence we are not adding Wifi. We add color to increase demand.

• Infrared doesn’t affect demand but increases profit per unit by $3. Hence we add this.

• Adding style reduces the demand but increases the profit per unit by $5.

• Net profit by adding color and infrared is $7834 and on adding style the net profit increases to $7972. Hence we add everything but Wifi. I am trading –off demand for a more standard estimate without much deviation. Profit is given primary importance.

Forecast Room

• A basic phone does not require style and other extra features and hence there could be a decrease in demand due to the higher price.

• A high end phone with the extra features could be attractive to the customers and might increase the sales.

Production Room

• Model A : Demand was high so there was a need for 2 suppliers. Far away suppliers can be chosen for this product due to relatively standard demand and the costs of backlogs are lower. Large order was given to supplier with shorter lead time. The initial order estimate was too high leading to high inventories. Decreased the order quantity in between

• Model B : Demand was small so a single supplier was sufficient. A far away plant cannot be chosen due to the varying value and demand of model B and the higher costs for inventories or backlogs. The very close supplier was not chosen due to the high setup costs and the added capacity is not required at the moment.

• I invested in Celldex because the cost of the survey is only $2 million but the costs of understocking and overstocking of the models is very high if the quantity of phones is varying highly from the demand.

• I changed the demand in between for Model A since the inventory levels were rising and increased demand for Model B since demand increased.

• Initial production levels were set very high for Model A due to high cost of understocking when compared to cost of over stocking but the exact opposite case for Model B and hence ordered a little less than estimated value.

Year 2

Design Room

• Voice dial doesn’t increase the demand and doesn’t add to the profits. But it does increase the variation in forecasts and also the costs so we won’t choose this option.

• Stylish, infra & extra battery : 7896

• Stylish & extra battery : 7810

• infra & extra battery : 7602

• Stylish & infra : 7528

• Stylish : 7454

• Though adding all 3 has the highest profit, the difference between that and adding only style & extra battery is minimal, but in turn increases the demand by 1k units each and also decreases variability by 2k units each.

Forecast Room

• A basic phone doesn’t require style and other extra features and hence there could be a decrease in demand due to the higher price.

• A high end phone with the extra features could be attractive to the customers and might increase the sales.

Production Room

• Model A : Demand was high so there was a need for 2 suppliers. Far away suppliers can be chosen for this product due to relatively standard demand and the costs of backlogs are lower. Large order was given to supplier with shorter lead time. The initial order estimate was too high leading to high inventories. Decreased the order quantity in between

• Model B : Demand was small so a single supplier was sufficient. A far away plant cannot be chosen due to the varying value and demand of model B and the higher costs for inventories or backlogs. The very close supplier was not chosen due to the high setup costs and the added capacity is not required at the moment.

• I invested in Celldex because the cost of the survey is only $2 million but the costs of understocking and overstocking of the models is very high if the quantity of phones is varying highly from the demand.

• I changed the demand in between for Model A since the inventory levels were rising and increased demand for Model B since demand increased.

• Initial production levels were set very high for Model A due to high cost of understocking when compared to cost of over stocking but the exact opposite case for Model B and hence ordered a little less than estimated value.

Year 3

Design Room

• Voice dial doesn’t increase the demand and doesn’t add to the profits. But it does increase the variation in forecasts and also the costs so we won’t choose this option.

• Speakers & extra battery : 8670

• Speakers and anti-theft : 8840

• Though adding all 3 has the highest profit, variation is too high. I have a choice between (Speakers & extra battery) and (Speakers and anti-theft). I am selecting the 2nd option because both have similar variations but 2nd has higher profit. The trade-off here is that the costs for adding anti-theft are much higher than adding extra battery.

Forecast Room

• A basic phone does not require extra features and hence there could be a decrease in demand due to the higher price. But cost of over stocking is less so i can order in high quantities.

• A high end phone with the extra features could be attractive to the customers and might increase the sales. But the markdown price is very low so i would