The Market
Jacobs Industries' only product is an industrial chemical that can be mixed with air to form a foam that is:
• Lightweight;
• Stable over a very wide range of temperatures;
• A very efficient thermal insulator;
• A very efficient acoustic insulator.
Jacobs sells its chemical to manufacturers of air conditioner retrofit kits. The manufacturers are all located in the region of Calopeia. They purchase the foam chemical as a substitute for competitors' products. If Jacobs cannot ship an order within 24 hours of receiving the order from the customer, the customer makes its purchase from a competitor without any loss of future demand.
The chemical is shipped in small plastic drums at a price of $1450 a piece. Demand for the
These holding costs for one drum for one year equal $100, whether the drum is en route to a warehouse or the drum is physically in the warehouse. There are no such holding costs for work-in-process inventory in the factory. Jacobs earns 10% per year on its cash, compounded daily.
Assignment
Your team has been hired to manage the supply chain for the Jacobs Industries. You can make the following changes to the supply chain:
• Capacity additions to the factory.
• The finished goods inventory threshold that triggers production of a new batch in the factory.
• The factory's production batch size.
• Whether batches are transported to the warehouse by mail or by truck.
Your objective is to maximize the cash generated by the foam technology over the remaining two years of its lifetime. On day 1460 the game will end and all inventory and capacity will be obsolete.
The simulation will run continually at the rate of 104 simulated days per real day, or 1 simulated day about every 14 minutes. You will have control of the game from day 730 to day 1460, or 730 days total. The game will conclude 7 days and about half an hour after it started. During that time you can access your supply chain any time of the day or night.
The winning team is the one with the highest cash position on day 1460.
After the game is over, your team should turn in a 4-page memo describing the actions you took and in retrospect, whether there were other choices that would have allowed your team