Final Project Global Supply Chain Simulation .docx 58 Helpful 4 Unhelpful Davenport University MGMT 757

The case simulation was for a supply chain manager responsible for the production of two new lines of mobile phones; Phone A and Phone B. When it comes to new technologies and technology products, there are an abundance of new introductions to the market. This makes it difficult to correctly predict the lifecycle of new products. The biggest challenge therefore is to ensure that the company does not suffer from the consequences of the explosion of new products. When products are introduced to the market at very high rate, it creates a problem for both manufacturers and retailers because of the increased number of outdated products left on the shelves, markdowns and write offs. Supply chain managers have to accurately predict the demand for their products and judiciously use production resources to match consumer demand. At the beginning of the simulation, I selected the options that gave the highest profit margin. I considered the opinions of my forecasting team and utilized the general consensus when making my decision. When picking suppliers, I decided to go with a two suppliers depending on the lead-time, production cost and set up cost. I chose an overseas supplier with low production cost and set up 2 This study source was downloaded by from CourseH on :44:51 GMT -05:00 Lijo f fees and a local supplier with no lead-time. A low lead-time was of particular significance because it allows for flexibility to respond to the changes in the market. I also decided to utilize CELLDEX because it allowed for a more accurate demand estimate. Even though CELLDEX was expensive, my expectation was that it would be beneficial in the long run by reducing the amount of times I would have to change production quantities. Changing production quantities draws a two million dollar fine. Most of the major decisions made were in the production room. As mentioned earlier, I decided to use CELLDEX because I felt more confident performing order change as soon as the change in demand is reported be CELLDEX. This worked really well to limit markdowns except for year three. I was very conscious of the sixty percent rule when deciding what percentage of production to allocate to the suppliers. FarFarAway supplier got just over 50% of production while PrettyClose got the rest. This allowed me the flexibility to reduce or increase productions with PrettyClose because of its zero lead-time. In some cases I had to reduce production of phone A while increasing the production of B according to demand as predicted by CELLDEX. This worked really well for year two when there were no markdowns. Furthermore, when stockout cost was greater than the markdown cost I decided to have a small surplus over expected demand because it was more profitable. I had to make some changes in the production room because some board members were not happy with my choices at the beginning. Some members thought that I should not only base my decisions on consensus data when assessing the desirability of an option. I took this on board and in some cases I decided to include a combination of options because I thought that customers would appreciate them in a phone and could potentially increase demand even if the forecast team disagrees. I was also advised not base my 3 This study source was downloaded by from CourseH on :44:51 GMT -05:00 Lijo f decisions on profitability; some good options did not add more profits while others that were not as good added more profit. During the first year I added options based on consensus and profitability but adjusted during later years to include options that I thought were good but did not increase the profit margin. At the end of the simulation, a cumulative total of my performance was provided. Overall, phone A enjoyed more success than phone B. Phone A’s cost of production was $337,733,220 and brought in revenue of $469,143,100. Phone B’s cost of production was $185,444,860 and brought in revenue of $255,259,800. Total cost of production was calculated as $523,178,080 and total revenue of $724,402,900. Administrative cost over the four-year period was $38,000,000. The figures are represented in the table below; Model A Model B Total Revenue $469,143,100 $255,259,800 $724,402,900 Cost $337,733,220 $185,444,860 $523,178,080 Administrative cost $38,000,000 Gross Margin $163,224,820 Gross Margin % 22.53 I learned a lot from this simulation. I learned the importance of creating a cost effective and flexible supply chain and how to manipulate them to suit market demands. Furthermore, I gained an incredible amount of insight into how to evaluate forecasting 4 This study source was downloaded by from CourseH on :44:51 GMT -05:00 Lijo f methods. I also learned how to build a plan based on the demand forecast and the importance of consumer research such as CELLDEX. All of these are very valuable lessons and skills to have. I will be implementing all of these when I start my personal project early next year. Reference Global Supply Chain Management Simulation v2;