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Gscmv 2 Record Sheets Attemp 1

Special Topics In Mgt (Georgia Institute of Technology)

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Record Sheet, Year 1

Team Number: ____1____ Name(s): ___Sihong Liu___________________________

As you make each decision, jot down a brief record of your reasons for the choices you made each year.
Please submit these record sheets to your instructor after completing the simulation. Thank you!

Design Room: Which options did you choose this year?

Option Chosen? Rationale for Selection
1.Upgraded Communication Y/N Introduced high volatility to the demand, increased the cost by 20%+
2. Exterior Y/N Average forecast reduced the demand by too much, increased volatility
as well
3. Stylish Y/N Increased profit margin and reduced forecast volatility
4. Storage Capacity Y/N Increased profit margin and reduced forecast volatility

Forecast Room: What was your forecast for each model, and how did you derive that forecast?
Model Fcst Rationale for Forecast
Model A 59 59 is between average forecast 59 and consensus forecast 61. I put less weight on consensus
because certain employee may have oversize influence when coming up the consensus
Model B 29 29 is between average forecast 28 and consensus forecast 31, I put less weight on consensus
because certain employee may have oversize influence when coming up the consensus

Production Room: Which suppliers did you choose this year? Why or why not?
Supplier Chosen? Rationale for Selection
1. FarFarAway Y/N Did not choose FarFar Away because of the long lead time reduces production
flexibility. The $1M lower initial setup cost cannot justify the production flexibility
given the high write-off cost.
2. FarAway Y/N We allocate most of the oder to FarAway because it increased our profit margin. It has
1 month lower lead time comparing to FarFarAway with only $1M higher initial cost.
3. PrettyClose Y/N We choose PrettyClose over very close because our product design leads to lower
volatility in monthly demand. Therefore, we don’t need the extra production capacity
to meet the uncertain demands.
4 VeryClose Y/N VeryClose has the extra capacity we don’t need with $1M more initial cost.

How did you allocate production for the two models between your suppliers, and why?
Supplier Model A Model B Month Changes/Other decisions
Production Production Production
Started
1. FarFarAway
2. FarAway 52 8 Feb Changed in April, lower Model A production to 48, in
creased Model B production to 12 given higher
demand
3. PrettyClose 8 21 Apr Changed in April, lower Model A product to 6, in
creased Model B production to 23 given higher
demand
4 VeryClose

Did you issue a production change order this year? If so, why? If not, why not?

I issued a change because after attending the Celldex, we have a more accurate demand forecast.

Boardroom Results: Did you receive a vote from the board member? What was your annual net profit?
Annual Net Profit: I got 3 votes from the board. My annual profit was $ 46,529,200

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Board Member Vote? Comments?

Carla Y/N I picked the correct feature choice for not selecting Exterior, but, did not pick the
correct reasoning.
Ankit Y/N
Mia Y/N Need to do better in production planning strategy.
Matheo Y/N
Adele Y/N

Other comments:

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Record Sheet, Year 2

As you make each decision, jot down a brief record of your reasons for the choices you made each year.

Design Room: Which options did you choose this year?

Option Chosen? Rationale for Selection
Y/N Increase profit margin, reduce volatility, increase total profit in both consensus
1. Stylish and average measure
Y/N Increase profit margin, reduce volatility, increase total profit in both consensus
2. Storage Capacity and average measure
Y/N Large gap between consensus demand and average demand, decrease
3. Extended Battery profitability
4. Durability Y/N Increased demand volatility, decreased profitability

Forecast Room: What was your forecast for each model, and how did you derive that forecast?
Model Fcst Rationale for Forecast
Model A 54 Average is 55, consensus is 52, put more weights on average
Model B 32 Both average and consensus are 32

Production Room: Which suppliers did you choose this year? Why or why not?
Supplier Chosen? Rationale for Selection
1. FarFarAway Y/N Did not choose FarFar Away because of the long lead time reduces production
flexibility. The $1M lower initial setup cost cannot justify the production flexibility
given the high write-off cost.
2. FarAway Y/N We allocate most of the oder to FarAway because it increased our profit margin. It has
1 month lower lead time comparing to FarFarAway with only $1M higher initial cost.
3. PrettyClose Y/N We choose PrettyClose over very close because our product design leads to lower
volatility in monthly demand. Therefore, we don’t need the extra production capacity
to meet the uncertain demands.
4 VeryClose Y/N VeryClose has the extra capacity we don’t need with $1M more initial cost.

How did you allocate production for the two models between your suppliers, and why?
Supplier Model A Model B Month Changes/Other decisions
Production Production Production
Started
1. FarFarAway
2. FarAway 48 12 Feb
3. PrettyClose 6 20 May Change 1: Model A increased to 21, Model B
decreased to 14; Change 2: Model A decreased to 12,
Model B decreased to 5
4 VeryClose

Did you issue a production change order this year? If so, why? If not, why not?
I issued 2 changes because
1. After attending the Celldex, we have a more accurate demand forecast.
2. Demand for both Model A and B dropped unexpectedly. As the inventory built up, we had to reduce order starting
Oct.

Boardroom Results: Did you receive a vote from the board member? What was your annual net profit?
Annual Net Profit: I received 3 votes from the board. Net Profit was $48,336,480

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Board Member Vote? Comments?

Carla Y/N You get my vote. Congratulations. I think that your decisions
on which options to include were better this year than last.
You put the consensus demand into correct perspective.
Ankit Y/N Congratulations. You get my vote. I think your choices in
regards to which option to choose are consistently well
thought out. You seem to understand that the options with
high demand uncertainty make accurate demand forecasting
difficult.

Mia Y/N I will have to withhold my vote. I am not sure you have a well
aligned sourcing and production scheduling strategy yet. I
would encourage you to think more about how capacity
allocation and production flexibility are connected.

Matheo Y/N I will give you my vote this year. You seem to understand the
difference between overseas and domestic suppliers, as well
as why it is to our advantage to manufacture mostly overseas
for one model but not for the other.

Adele Y/N I will not be able to give you my vote. Unlike last year, you
have not accurately looked at the trade-offs between stocking
out of a model and having excess inventory at the end of the
year. Both stockout and excess inventory costs need to be
considered when deciding how much of each model to
produce.

Other comments:

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Record Sheet, Year 3

As you make each decision, jot down a brief record of your reasons for the choices you made each year.

Design Room: Which options did you choose this year?

Option Chose Rationale for Selection
n?
Y / N Reduce profit margin, the gap between average and consensus is too large,
1. Extended Battery difficult to predict demand
2. Durability Y / N Reduce profit margin, the volatility of demand forecast is too high
Y / N Reduce profit margin, the gap between average and consensus is too large,
3. Anti-Theft difficult to predict demand
4. High Quality Audio Y / N Increase demand and reduce demand volatility

Forecast Room: What was your forecast for each model, and how did you derive that forecast?
Model Fcst Rationale for Forecast
Model A 66 Average is 65, consensus is 68, put more weights on average
Model B 31 Average is 29, consensus is 34, put more weights on average

Production Room: Which suppliers did you choose this year? Why or why not?
Supplier Chosen? Rationale for Selection
1. FarFarAway Y/N Did not choose FarFar Away because of the long lead time reduces production
flexibility. The $1M lower initial setup cost cannot justify the production flexibility
given the high write-off cost.
2. FarAway Y/N We allocate most of the oder to FarAway because it increased our profit margin. It has
1 month lower lead time comparing to FarFarAway with only $1M higher initial cost.
3. PrettyClose Y/N We choose PrettyClose over very close because our product design leads to lower
volatility in monthly demand. Therefore, we don’t need the extra production capacity
to meet the uncertain demands.
4 VeryClose Y/N VeryClose has the extra capacity we don’t need with $1M more initial cost.

How did you allocate production for the two models between your suppliers, and why?
Supplier Model A Model B Month Changes/Other decisions
Production Production Production
Started
1. FarFarAway
2. FarAway 55 5 Feb
3. PrettyClose 9 23 Apr Sep: reduce the capacity of Model B to 14
4 VeryClose

Did you issue a production change order this year? If so, why? If not, why not?
I issued 1 change because the demand for both Model B dropped unexpectedly. As the inventory built up, we had to
reduce order starting Sep.

Boardroom Results: Did you receive a vote from the board member? What was your annual net profit?
Annual Net Profit: I have 4 votes from the board. Net profit is $ 40,922,500

Board Member Vote? Comments?

Carla Y/N You get my vote. Congratulations. Just like last year, you have
been doing a great job on evaluating options based on more
than the consensus data. You seem to understand which
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forecasting data are most relevant in predicting the future

demand and profitability of an option. I vote yes.

Ankit Y/N Congratulations. My vote is behind you. I think your choices in

regards to which option to choose are consistently well
thought out. You seem to understand that the predictability of
demand and profitability is negatively influenced by choosing
certain risky options.
Mia Y/N Congratulations, your selections this year convinced me to
give you my board vote. I feel like you clearly understand the
importance of retaining production flexibility when setting up a
production schedule. If you can keep thinking about ways to
increase production flexibility, you will do fine next year as
well. Remember that the challenge is to have the flexibility to
adjust demand patterns after real demand is observed, while
keeping costs in mind.

Matheo Y/N I will give you my vote. You are continuing to do a good job.
You seem to have understood the difference between the
models when it comes to overseas versus domestic
production. If you can act on your beliefs about the difference
in flexibility between these sourcing possibilities, you will do
fine in the next year
Adele Y/N I am not sure whether you have developed a sound strategy
about production volumes for each model. I will withhold my
board vote for now and see how well you do next year. Excess
inventory costs (or markdown costs) and the costs of stocking
out of a model all need to be part of your calculations.

Other comments:

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Record Sheet, Year 4

As you make each decision, jot down a brief record of your reasons for the choices you made each year.

Design Room: Which options did you choose this year?

Option Chos Rationale for Selection
en?
1. Anti-Theft Y / N Reduced profit margin, reduced demand
2. High Quality Audio Y / N Increased profit margin, slightly reduced demand, reduce Model A volatility
3. Super-slim Y / N Reduced profit margin, increased forecast volatility, reduce demand
4. Camera Quality Y / N Reduced demand, reduced profit margin

Forecast Room: What was your forecast for each model, and how did you derive that forecast?
Model Fcst Rationale for Forecast
Model A 62 Consensus 63, average 62, they are similar, we picked a more conservative number
Model B 26 Consensus 30, average 26, we take the lower estimation but will start building inventory
earlier in case there are unexpected demands.

Production Room: Which suppliers did you choose this year? Why or why not?
Supplier Chosen? Rationale for Selection
1. FarFarAway Y/N Save 1m setup cost
2. FarAway Y/N
3. PrettyClose Y/N Have enough capacity
4 VeryClose Y/N

How did you allocate production for the two models between your suppliers, and why?
Supplier Model A Model B Month Changes/Other decisions
Production Production Production
Started
1. FarFarAway 55 5 Jan
2. FarAway
3. PrettyClose 7 19 Apr Change 1: Jun reduce model A to 0, increase Model B
to 29. Change 2: Sep increased Model B to 35.
4 VeryClose

Did you issue a production change order this year? If so, why? If not, why not?
2 changes due to worst forecast by not attending CELLDEX

Boardroom Results: Did you receive a vote from the board member? What was your annual net profit?
Annual Net Profit: Received 4 votes. Net profit was $ 51,113,080

Board Member Vote? Comments?

Carla Y/N You get my vote this year. Congratulations. I think that you
have been doing a great job on evaluating options based on
more than the consensus data. You seem to understand that
the average forecasting data are often more relevant in
predicting the future demand and profitability of an option
than the consensus forecasts. Consensus forecasts can often
be biased by group dynamics.
Ankit Y/N Congratulations. My vote is behind you. I think your choices in
regards to which option to choose have been consistently well
thought out. You seem to understand that a high degree of
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variance among the different forecasters is a good indication

of demand uncertainty. This uncertainty in the option can
reduce the demand certainty for an otherwise certain product
and, thus, profitability.
Mia Y/N You have again done a great job and will receive my vote. I feel
like you clearly understand the importance of increased
flexibility in order to adjust to emerging demand patterns. You
have attained this flexibility by splitting up the production
volume between local and overseas suppliers in a suitable
way.
Matheo Y/N I will give you my vote. You are continuing to do a good job.
You seem to have understood the difference between Model A
and B when it comes to overseas versus domestic production.
As you must well understand, the models with a higher degree
of certainty in demand can be scheduled more safely
overseas, since they will likely need less production
adjustments. The higher uncertainty models, on the other
hand, need to be scheduled with the more responsive
domestic suppliers.
Adele Y/N I regret to not be able to give you my vote this year. I feel like
you did not fully grasp the implications of stockout, holding,
and markdown costs. If stockout costs (in this case the profit
margins) are high relative to the markdown costs, then it is
often advisable to plan for a small surplus over expected
demand. If stockout costs are low relative to the cost of selling
the item at a loss at the end of its life-cycle, it is often the right
thing to underproduce.

Other comments:

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