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ISYE 3450 SC Game Memo 1 - AmberPressley - BrandonHarris
ISYE 3450 SC Game Memo 1 - AmberPressley - BrandonHarris
Brandon Harris
ISYE 3450
3/22/17
Dabindustries was to operate Jacobs Industry and provide customers with an industrial
chemical that can be mixed with air to form foam. We expanded and managed the companys
supply network in Calopeia. The objective was to maximize the cash balance, which would
increase with sales of the foam technology. By the 1,460 day Jacobs product will be worthless,
th
so it was dabindustries job to minimize the inventory as much as possible and end with a high
cash balance. We started off steady then there was drastic change to the capacity made on
When making an initial strategy for the game we analyzed the instructions and used tools
learned in class to determine beginning values. We decided to increase the capacity immediately
so we could see how future trends would affect it and would have the most time to make
changes. By setting a capacity at 25 we would be able to satisfy most of the orders placed by
truck in a week with the information given. We decided to go with the truck transporting the
barrels, because it seemed like the cheapest option at the time. Our reasoning was only looking at
cost, not time of shipping, and this was a huge factor that will be spoken about later.
By splitting our data into different seasons we can analyze it using forecasting. We split
the data into 5 seasons of 182 days a piece. By adding all the demands for this period and
dividing it by the number of days in the period, we are able to come up with a seasonal factor for
each period. Once the seasonal factor for each season was acquired we multiplied this by our
actual demand to get our deseasonalized demand. The demand levels we forecasted seemed to fit
our data well for the certain periods and we were able to satisfy demand based on our forecasting
and capacity levels in all periods except for period 4, which was between days 1095 and 1277.
During this period or factory capacity was only 40 and the forecasted demand was 90.52, we lost
demand here because we were unable to satisfy the demand in the period of time given.
To begin the game we started with an early factory capacity increase. Not knowing much
about how the game operated at the time we decided a small increase would be useful for the
company to complete multiple orders with the average drum order being 7 or 8 pieces. We
believed this increase to be necessary to satisfy the demand at the level the game started at and
appropriate for fluctuations at future levels. Also, by increasing the capacity on day 735 to a
value of 25, we were given the most time to analyze changes and fix or improve on any mistakes
that were made knowing that the change would take 90 days to be complete. However, this also
made our strategy a little trickier with the cost that is incurred with a capacity change. The
company is immediately charged for the change and not having much data to rely on there was a
realization that it would take some time to make that money back so we decided to hold off on
After a couple hundred days, day 919 came around and after looking at our cash balance
plot, demand plot, and inventory plot we were able to see that there was definitely a steady
increase in cash flow with the capacity increase. We could also see that demand was lost because
at a factory capacity of 30 we were unable to fulfill some orders in 7 days in our case. As a
group, we decided to go with another capacity increase of the same size to a value of 30. We
assumed that if a truck took 7 days to ship and the average demand for the drum was 7 or 8
drums then this would equate to about 42-49 drums on average at high peak demand, however at
this time period we did not see any signs of high demand. Also, we did not want to end up with
too much extra inventory knowing that it would go obsolete at the end of the game.
At factory capacity of 30 we could see a small fluctuation of cash balance with large
increases coming during peak demand times. These peak demand times include days 1179, 1217,
and 1289 among others. This capacity level seemed to be working pretty well so we decided with
another capacity increase by 10 units this time from 30 to 40 on the day of 1260. This capacity
level worked great as we reached our highest cash balance during this time. Unfortunately, our
cash balance increased steadily up until around day 1366 when it dropped heavily due to a
As mentioned before we made some mistakes in the game that greatly affected our
ranking by the end of the round. At the beginning of the game the factorys capacity was set at 20
drums per day. By looking at the previous demand we figured that we would need to set the
capacity higher because what it initially was set at was lower than the average demand. We knew
additional capacity would be costly and took three months in the game so we wanted to increase
the capacity early on to see how it would affect the cash balance. We increased the capacity to 25
on day 735. We steadily increased the capacity, which seemed to work for us. On day 1,366 we
wanted to take the capacity from 40 to 50. Instead of increasing the current capacity by 10, we
accidently put in 50, which took the capacity all the way to 90. Our cash balance before the
capacity change mistake was $5,139,000. The capacity increase cost us $2,726,000, which left us
with $2,413,000.
This of course brought our ranking down. Without that capacity change to 90 we would
have had a cash balance of approximately $5,500,000. We calculated this by averaging the
demand we had from day 1260 to day 1366 and multiplying that by $150, which is the cost
customers pay per drum. Proper capacity management is important to this game because it
ensures that the available capacity can meet the required demand for the product. With us setting
the capacity so high, not only did we lose a large sum of money for the increase, we were also
not able to sell the entire product because the demand did not match capacity. Something my
team did not take inconsideration before we started the game was that orders varied and the
number of drums sold day to day could be drastically different. We should have paid closer
attention to order point. Production of a batch is triggered when the finished goods inventory
falls below the reorder point that we would set. Our order point was way too high and we
realized later that by decreasing the order point it would allow for orders to be fulfilled faster.
This would decrease our lost demand and would positively increase our cash flow. On day 1,433
we changed our order point to 300. This change was made way too late and we set that parameter
This brings up the next change we should have made to improve our position in the
game, the shipping option. We initially started off by using truck because with a batch size of
200, which is where we started, it costs less to transport by truck then by mail. The truck can
hold 200 at a time and it costs $15,000 to ship it off by truck. Mail will costs us $150 per drum
and with 200 that would be $30,000, which is a $15,000 increase. This made sense in beginning
because we were still seeing how our demand would be and we wanted to make sure if we had a
large number of orders it would not cost a ton to ship them out. Although the trucking option is
cheaper, that is only beneficial if the factory ships drums on full trucks. No matter if the truck is
half full or less it still cost us $15,000 to ship those drums. As we saw, the demand was never
consistently 200 plus, so we loss a significant amount of money. What would have helped us is if
we reduced the capacity sooner and towards the end of the game reduce production to minimize
the risk of excessive leftover inventory. It would have also helped drastically is we changed our
Unfortunately, we also lost a group member due to unforeseen circumstances in the last
few days. This was out of our hands and this person was supposed to play an important role in
our supply chain game and they were not able to do that responsibility. This may have placed us
in a lower position because we were not able to monitor the game as our group planned to.
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