Amber Pressley

Brandon Harris

ISYE 3450

3/22/17

Supply Chain Game 1 Report

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

accident, which shifted dabindustries position heavily in the game.

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

making any more changes for a couple hundred days.

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

mistake made during a capacity change execution.

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

way too high.

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

shipping method from truck to mail.

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.

Transaction History

Sources and Uses of Cash