Supply Chain Simulation

The Market Jacobs Industries’ only product is an industrial chemical that can be mixed with air to form a foam that is:

• Lightweight;

The chemical is shipped in small plastic drums at a price of $1450 a piece. Demand for the chemical is highly seasonal but otherwise very stable. There are no long-run market trends, either upward or downward. The size of orders is very random, with an average size of 7 or 8 drums. Orders arrive randomly throughout each 24-hour day. It is now day 730, two years after Jacobs began producing and marketing the chemical. A new foamtechnologyis in development at Jacobs that will render all production capacity and inventory of the current foam obsolete and worthless on day 1460.

All customers are aware of the pending new technology and as a result, demand will decrease to zero on day 1460. Operations andFinanceJacobs’ distribution network consists of a single factory and a single warehouse, both in Calopeia. The warehouse only supplies air conditioner retrofit kit manufacturers, who are all in Calopeia. Jacobs produces its chemical in batches, loads the chemical into small plastic drums, and then transports the drums from the factory to the warehouse by truck. The warehouse sends drums to customers as orders are received.

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 to do even better.

You will graded on the use of conceptual tools from class that you use to justify your conclusions. Selling price = $1450 Demand order size = 7 or 8 Obsolete date = 1460 day Set up Cost = $150 Capacity = 20 per day Capacity expansion = $50,000 to increase add 10 drum per day , but 90 days to complete capacity Cost of production = $1500+(units in a batch)*$1000 Holding cost =$100 per drum for one year Averagemin Max Day 123269 Day 26622133 Day 344397 Day 413163 Day 5425106 Day 66422108 Day 722185 -Most efficient if we set the batch size to 200 when only using truck delivery – –