REPORT ON LAMSON GAME (Group- 19)

Challenges faced in decision making: -

 What strategy should be used for planning production for the whole season ahead?
 What are the trade-offs between overtime, stockouts, and inventory carrying costs?
 In view of the uncertainty of demand, what steps may be taken to protect against all
eventualities?
Initial standpoints: -
 We knew the curve of the demand and the variation from it plus-minus 25%
 We knew the inventory carrying costs, stockout costs, and the overtime costs
 We knew the last year sales at the peak in both sizes
 We knew the capacities and the capacity of the plant for size combinations
Approach towards the problem: -
 Ratio of the inventory cost of 18” to 36” is 1:3
 Production capacity at regular times is 6000 of 18” and 1800 of 36” which gives us
the ratio of 3.3:1
 Stockout cost of 36” was 3 times. So, if we were short on capacity and if I look at
stockout cost, we were better off producing 36”
 During some period, we did overtime on the basis that we can make an additional
3000 units of 18” for an additional cost of 20000 and avoid stockout charges of 60000
which looked like a good investment
 The ratio of inventory to stockout is 10:1. Which meant we could carry inventory for
10 periods to incur the same kind of costs that we would in the case of one stockout
 In case sales were medium, we used overtime to take care of peak period
The biases, constraints, and personal decision-making styles while playing
the game: -
 The decision to choose a suitable production plan as per the period of the year was
very much based on the sales pattern.
 As we understood from the case study the summer season is the high sales period and
almost three-quarters of sales are made in summer only.
 Moreover, the months of June and July are the highest demand periods as per
previous data and sales trends.
 The months of October till March are low volume months and cumulatively they
make one-fourth of sales of the entire year.
 From April the sales pattern is on the increasing trend and reached a peak during the
last weeks of June and the first week of July conjuncture, however, post-July it again
starts dipping and eventually decrease to a low volume value at the beginning of
October.
 Interestingly, if we only consider the sales pattern, we may opt for different options,
however when we bring in the other factors into account, it helps to take an optimized
decision and more importantly profitable.
 Consequently, the production plan was chosen in order to keep in mind the following
factors:
 Sales trend
  Time of the year
 Cost of inventory holding
 Cost of stocking-out
 Cost of overtime paid
Decision-making style to strengthen our observations: -
 While making the iterations the objective was:
 The cost of storage should be minimized
 The cost of stocking-out should be minimum
 Balance must be maintained in both costs
 The cost of overtime paid must be thoughtfully chosen
 Keeping the sales pattern in trend with the forecasted demand pattern
 Evaluating risk on a regular basis
Things to know to make better-informed choices: -
1) Knowing the sales levels would have helped us to identify our future or current
demand and helped us in producing accurately
2) Knowing if the levels are going to be high, low, or medium
3) Knowing exactly when plus or minus 25% is going to occur creates planning flaws
regarding inventory management
4) Knowing about a final penalty for the excess stock – but this happens in real
situations so we could have taken it into account.