FARAH NAZ

ERP ID: 18535

SIMULATION ASSIGNMENT

INTRODUCTION:
I have been hired as a Supply Chain Manager responsible for production of two new lines of
mobile phones; Model A and Model B. Model A is a base model and Model B is a high end
model. My task is to make key decisions on which features to include and to whom to
outsource the work by keeping in mind the sales season i.e; May through December.
Ultimately, the final objective is to forecast sales and profitability for the next four years.

IMPORTANT QUESTIONS:
Following questions were kept in mind before making the decision.

Q1. What will be the demand for reach year?

Q2. How much production is needed?
Q3. Which supplier should be selected for outsourcing?
Q4. Which features to include in the mobile phone?
Q5. Should we invest in marketing activities?

IMPORTANT FACTORS FOR DECISION MAKING:

Decisions were made on the basis of two factors.

- Profitability.
- Number of votes from board members.

DECISION MAKING PROCESS:

FEATURES DEMAND SUPPLIER MARKETING ANY CHANGE

SELECTION IN
ACTIVITY
AND PRODUCTION
PRODUCTION
ORDER
1. FEATURES:

Several features were added and eliminated on the basis of their impact on the demand of
phones. Each feature alone or in combination led to forecasted demand and profit per unit.
The features with the highest profit per unit and most votes were selected.

2. DEMAND:

Consensus demand was forecasted by taking into consideration the standard deviation to
see if there is any outlier that is causing average demand to deviate. Also, each board
member gave their respective opinions on demand which really helped in forecasting the
actual demand.

3. SUPPLIER SELECTION AND PRODUCTION ORDER:

Two suppliers were selected; one was far-away supplier with a relatively larger lead time
than the local supplier with zero lead time. This combination was selected on the basis of
two factors; Cost per unit and zero lead time.

4. MARKETING ACTIVITY:

We invested in marketing for three years because we considered it to be important for our
supplier decision making and also for creating demand.

5. CHANGE IN PRODUCTION:

We had a simple strategy, each year we planned to pay $2,000,000 for change in production
because fluctuations could cost us more than $2 million if not addressed.