- Mobile phones - 2 new lines

- Span of 4 years
Objectives
A- Base model
B- high end model
Decide which features to include with whom to outsource the work

Sales/demand May- Dec, will be consistent

Judged on:
Gross margin = Net sales - Cost of Goods sold
Number of votes of confidence by board members

Design room
Up to 4 options to base model
● Pay attention to the estimated change in demand created by each option, profit per unit
and other variable

Forecasting Room
Predict the demand of the two phone models for each year
Remember demand is spread out evenly across all months from may-dec

Production room
After choosing suppliers you will advance month by month and observe the accuracy of your
forecasts
You will be able to change your production schedule but this will require cost

Board room
Review our financial performance
See how well our strategic choices went based on feedback

When board meeting ends, return to design room to start next year
You can track your progress using scorecard on left side
You can refer to previous decisions you made by clicking on the Decision history section

A lot of extra things not always necessary for value

Problems facing supply chain managers, more different products, short life cycle (shrinking)
Electronics especially, and others like apparel etc
Consequences arising from this proliferation of new products can distress both manufacturers
and retailers
Retailers have responded by becoming lean
SUpply chain Managers struggle to predict demand more accurately. Rethinking the supply
chian to make it more responsive to market and actual demand
New tech helps provide data about demand (barcodes and POS scanners)
- But need better strategies to allow them ot more accurately predict and fulfill demand in
a rapidly changing global economy

We are supply chain managers, making key decisions and see

Casey- procurement officer who works for us
Options can add or detract form sales- forcasters are unpredictable
Each option is automatically added to both models, you CANT just add it to 1

Jessica- marketing director

We have to add up to 4 features, pay attention to the estimated change
Four suppliers over a 12 month period

DESIGN ROOM
Model B is an upgraded version of A
Problem with B will need to drastically mark down its price at the end of the year in order to sell
leftover units
Consensus estimate

YEAR 1
Design room:
- Looking at risk and reward and standard deviation, we hopefully can increase margins
with reduced risk with “Stylish”
- But 4/6 think demand will go down

Forecasting Room:
- We need our own forecast
- But our numbers will not affect your production schedule, but they will help you later as
you determine where and how to source your products
- We think model A has a more clear consensus, the numbers are about the same
for each forecaster so we are choosing 1 below the average
- Model B has had over production in past so we’re guessing much lower to avoid
potential loss of over producing and liquidating the models cost 155 and
liquidation price 46.50

Production room:
- Key decision to fulfill this demand
- Outsourced all manufacturing
- Keep eye on inventory levels in the same month
- 2 local options, higher cost per unit but no lead time (faster)
 - All 4 suppliers have high quality but long wait for the delivered materials is a definite
drawback
- Each supplier demands a very high set up fee 1-2 million $
- You can change but costs $$ and only at the beginning of year
- Suppliers demand a penalty of $2 million to change quantities
- Max reduction 60%
- Keep watchful eye on inventory levels, high carrying costs associated with excess
inventory. For model A up to 4.80$ and B $5.60

Conference- YES good investment for 4 years

Production room prt 2:

Farfar Away set up 1 mil, 60k capacity, 4 month lead time, unit cost 135 and 155
Far away - set up 2 mil, 60K capacity, 3 month, unit cost 135 and 155
Pretty close - set up 1 mil, 35K capacity, 0 month, unit cost 145 and 165

We chose far away for Model A- specialization for the 1 product and reduced costs

ANd pretty close for Model B- specialization for 1 product

Model B is likely to go up 20%

Change far away to 35- 2 mil penalty

We did not change Farfar away since it was more profitable to make more of a profit than to
reduce cost

Demand for high end (maybe low?) tech going up 20% and as we had inventory we chose not
to change supplier demands

Feedback from board:

- When the forecast team has differing views (discrepancies) they are not sure about the
demand.
- You should think about your choice of suppliers, capacity allocation, and production
flexibility.
- excess inventory costs (or markdown costs) and the costs of stocking out of a model all
need to be part of your calculations.
-

Congratulations!
Here you'll see a summary of your financial performance over the past four years. You may
want to take it to your new team for discussion so you can share what you learned during your
time as our Supply Chain Manager. Remember, it's important to:

Create a cost effective and flexible supply chain

Build flexibility into the supply chain
Understand how to evaluate forecasting methods
Build a production plan based on probabilistic demand forecast
Weigh the relative importance of results and process performance measures

Class-
Board memebers’ objectives
Carla-forecasting consensus vs mean
Not fan of consensus- might be skewed. (too high)
Mean forecast

Ankit forecasting
Standard deviation should be low. High standard dev is high risk

Matheo- stocking levels

Overproduce when the markdown cost < stockout cost
Underproduce when the markdown cost > stockout cost

Mia Production flexibility

More responsive reactive suppliers
You issue a change order after some demand is observed, but early enough to make an impact
Flexibility- some but not all with flexible production

Adele- Production flexibility

The reachtive supplier produces a greater percentage of the product with the less certain
demand (usually model B)