You will work in groups of two or three to comple
Assignment:
You will work in groups of two or three to complete the simulation assignment. Decisions will be on how to design and manage the supply chain of a global mobile phone product line. You will gain experience in forecast demands, choosing suppliers with varied cost, lead times and capabilities. This simulation will occur over a 4-year period, allowing you time to refine your decisions. At the completion of the simulation, your team will present a 15 minute debrief video.
Add notes to slides 15-18 and any additional slides added. Audio will be taken care of upon receiving final revision.
Global Supply Chain Simulation
By: Kelly Houston
Rosa King
Tia McKinney
Bryan Omolo
Victor Rohrbacker
Eric Rosegay
1
Results for
Eric Rosegay
Design Room Options Chosen
Year 1 – Storage Capacity
Year 2 – Storage Capacity & Extended Battery
Year 3 – Audio Quality
Year 4 – Audio Quality
Strategy was to add the option that was the most financially neutral. The year extended battery was added, which had a risk of a higher loss, revenues were lowest of all 4 years.
CELLDEX Industry Conference
Chose to invest in CELLDEX all 4 years. Always adjusted order quantities accordingly.
Actual Demand Projections / Supplier Production History
All 4 years FarFarAway & PrettyClose were chosen as suppliers
Both suppliers have $1m setup fees, opposed to $2m setup fees
Chose one of the global suppliers for the lower unit cost
Chose one of the local suppliers to be able to change quantities as the forecast changed
Always maxed out production amounts of FarFarAway at 60k units, all adjustments in the year due to CELLDEX or news events were changed at PrettyClose
Always paid the $2m to adjust closer to CELLDEX results
In year 1, I only adjusted for CELLDEX, and should have adjusted earlier in year
In year 2, there were a lot of news events that affected forecast amounts; therefore, production was changed 3 times total.
In years 3 and 4, adjustments were made for CELLDEX and news events in the 4th quarter.
Production Room Decisions
Boardroom Results
Year 1 – Approval of 2 / Year 2 – Approval of 1 / Year 3 & 4 – Approval of 3
Revenues
Revenues were pretty consistent total company over all 4 years
Revenues by model varied more
There was a direct relation between cost by model and revenue by model
Costs
Costs were also very consistent across all 4 years
Same suppliers were used every year as well as the investment in CELLDEX
Overall
Satisfied with the results
Remained profitable every year with the lowest gross margin percent at 24%.
Glad we invested in CELLDEX and placed change orders.
Helped to have enough of the appropriate orders
Helped to not have too much excess inventory at the end of the year
Financial Results Analysis
Results for Kelly Houston
Design Room Options Chosen
Year 1 – Exterior Material
Year 2 – Stylish & Extended Battery
Year 3 – GPS Anti-Theft Tracking, Audio Quality
Year 4 – Super-Slim, Camera Quality
Strategy was to add the option that would have the least risk. The first year where exterior material was the only focus yielded the lowest revenue.
CELLDEX Industry Conference
Chose not to invest in CELLDEX all 4 years.
Actual Demand Projections / Supplier Production History
All 4 years FarAway & PrettyClose were chosen as suppliers
FarAway & Pretty Close had $2m and $1m setup fees, respectively
Chose one of the global suppliers for the lower unit cost
Chose one of the other suppliers for the lesser lead time
Always split the units evenly between each supplier all 4 years
Never paid the $2m for CELLDEX
Production Room Decisions
Financial Results
Boardroom Results
Year 1 – Approval of 2 / Year 2 – Approval of 1 / Year 3 & 4 – Approval of 1
Revenues
Revenues were pretty consistent with all 4 years
Revenues consistently went up with every year for both models
Costs
The costs remained consistent across all 4 years
We used the same suppliers each year and did not utilize the CELLDEX option
Overall
Satisfied with the results of profitability and keeping costs down over time
Remained profitable every year with the lowest gross margin percent at 24% and the highest 28%.
Financial Results Analysis
Design option: Upgraded communication
Gross Margin: 24.78M
Gross Margin %: 16.64
Received one board member vote
No CellDex feedback
No change orders
Forecasted:
Model A: 56k
Model B: 25k
McKinney Year One
McKinney year two
Multiple options: stylish, extended battery, durability
Trusted demand forecast
I didn’t receive any board member votes
Gross margin: 6.17M
Gross margin %: 14.95
CellDex feedback
Issued one change order
Forecasted:
Model A: 50k
Model B: 32k
Multiple options: durability, audio quality
Received 3 board member votes
FarFar away and very close
Gross margin: 41.87
Gross margin %: 24.05
Started production in January
Forecasted:
Model A: 65k
Model B: 36k
McKinney year three
Multiple options: Audio quality, super-slim
Forecasted
Model A: 65k
Model B: 33k
Received 2 board member votes
Gross margin: 55M
Gross margin %: 28.97
FarFar Away and Pretty close
Started production in January
McKinney year four
Summary Gross margin: $24,780,400
Summary gross margin %: 16.64
Customer and board member feedback is important
Lack of trust from board members
Ensure the data is quantifiable
Important to know the market and select the right options based on the market instead of my personal preferences.
McKinney Summary
Results for Rosa King
Design Room Options Chosen
Year 1 – Storage Capacity
Year 2 – Stylish & Storage Capacity
Year 3 – Audio Quality
Year 4 – Audio Quality
Strategy was to add the option that would have the least risk. The first year where exterior material was the only focus yielded the lowest revenue.
CELLDEX Industry Conference
Chose not to invest in CELLDEX all 4 years.
King- Production Room Decisions
King- Financial Results
King- Financial Results Analysis
Thank
You
Year 1Year 2Year 3Year 4Cummulative
Model A Sales86,305,000 114,300,000 107,500,000 91,584,000 399,689,000
Model A Markdown1,306,800 – 1,134,000 – 2,440,800
Model A Revenue87,611,800 114,300,000 108,634,000 91,584,000 402,129,800
Model B Sales66,640,000 42,135,000 46,665,000 74,844,000 230,284,000
Model B Markdown364,800 670,800 768,000 – 1,803,600
Model B Revenue67,004,800 42,805,800 47,433,000 74,844,000 232,087,600
Total Revenue154,616,600 157,105,800 156,067,000 166,428,000 634,217,400
Model A Production57,904,000 78,936,000 72,750,000 59,904,000 269,494,000
Model A Inventory106,600 112,500 55,900 46,640 321,640
Model A Total58,010,600 79,048,500 72,805,900 59,950,640 269,815,640
Model B Production44,000,000 30,024,000 32,630,000 48,399,000 155,053,000
Model B Inventory78,400 508,800 209,100 85,680 881,980
Model B Total44,078,400 30,532,800 32,839,100 48,484,680 155,934,980
Subtotal Costs102,089,000 109,581,300 105,645,000 108,435,320 425,750,620
Setups2,000,000 2,000,000 2,000,000 2,000,000 8,000,000
CELLDEX2,000,000 2,000,000 2,000,000 2,000,000 8,000,000
Change Orders2,000,000 6,000,000 4,000,000 4,000,000 16,000,000
Total Cost108,089,000 119,581,300 113,645,000 116,435,320 457,750,620
Gross Margin46,527,600 37,524,500 42,422,000 49,992,680 176,466,780
Gross Margin %30.092%23.885%27.182%30.039%27.824%
Financial Results
Sheet1
| Financial Results | ||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Cummulative | ||
| Model A Sales | 86,305,000 | 114,300,000 | 107,500,000 | 91,584,000 | 399,689,000 | |
| Model A Markdown | 1,306,800 | – 0 | 1,134,000 | – 0 | 2,440,800 | |
| Model A Revenue | 87,611,800 | 114,300,000 | 108,634,000 | 91,584,000 | 402,129,800 | |
| Model B Sales | 66,640,000 | 42,135,000 | 46,665,000 | 74,844,000 | 230,284,000 | |
| Model B Markdown | 364,800 | 670,800 | 768,000 | – 0 | 1,803,600 | |
| Model B Revenue | 67,004,800 | 42,805,800 | 47,433,000 | 74,844,000 | 232,087,600 | |
| Total Revenue | 154,616,600 | 157,105,800 | 156,067,000 | 166,428,000 | 634,217,400 | |
| Model A Production | 57,904,000 | 78,936,000 | 72,750,000 | 59,904,000 | 269,494,000 | |
| Model A Inventory | 106,600 | 112,500 | 55,900 | 46,640 | 321,640 | |
| Model A Total | 58,010,600 | 79,048,500 | 72,805,900 | 59,950,640 | 269,815,640 | |
| Model B Production | 44,000,000 | 30,024,000 | 32,630,000 | 48,399,000 | 155,053,000 | |
| Model B Inventory | 78,400 | 508,800 | 209,100 | 85,680 | 881,980 | |
| Model B Total | 44,078,400 | 30,532,800 | 32,839,100 | 48,484,680 | 155,934,980 | |
| Subtotal Costs | 102,089,000 | 109,581,300 | 105,645,000 | 108,435,320 | 425,750,620 | |
| Setups | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | 8,000,000 | |
| CELLDEX | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | 8,000,000 | |
| Change Orders | 2,000,000 | 6,000,000 | 4,000,000 | 4,000,000 | 16,000,000 | |
| Total Cost | 108,089,000 | 119,581,300 | 113,645,000 | 116,435,320 | 457,750,620 | |
| Gross Margin | 46,527,600 | 37,524,500 | 42,422,000 | 49,992,680 | 176,466,780 | |
| Gross Margin % | 30.092% | 23.885% | 27.182% | 30.039% | 27.824% | |
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