Supply Chain Simulation

The Market Jacobs Industries only product is an industrial chemical that can be mixed with strain to form a foam that is Lightweight static over a in truth wide range of temperatures A very efficient thermal insulator A very efficient acoustical insulator. Jacobs sells its chemical to manufacturers of air conditi angiotensin-converting enzymer retrofit kits. The manufacturers are whole located in the region of Calopeia. They obtain the foam chemical as a military reserve 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 with off any loss of future demand.The chemical is shipped in small plastic beat outs at a value of $1450 a piece. study for the chemical is highly seasonal but some otherwise very stable. there are no long- wander market trends, either upward or downward. The size of orders is very random, with an average size of 7 or 8 drums. Orders arrive ra ndomly throughout each 24-hour sidereal day. It is now day 730, dickens years after Jacobs began producing and marketing the chemical. A new foam engineering science is in development at Jacobs that volition render all output qualification and stock certificate 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 and Finance Jacobs distribution ne bothrk consists of a single milling machinery and a single store, both in Calopeia. The warehouse only supplies air conditioner retrofit kit manufacturers, who are all in Calopeia. Jacobs produces its chemical in kettle of fishes, loads the chemical into small plastic drums, and then transports the drums from the factory to the warehouse by motortruck. The warehouse sends drums to customers as orders are received.The exist of fulfilling an order, including the live of card the drum to the customer, is $150 per drum. The current capacity of the factory is 20 drums per day. more than factory capacity can be purchased at a cost of $50,000 per drum per day. For example, expanding the capacity by 10 drums per day for a essential of 30 drums per day would be (10)$50,000 = $500,000. qualification cost are incurred as currently as the capacity expansion begins. It takes 90 age to breeze through a capacity expansion. Capacity cannot be retired. Production in factories is carried out in batches, where each batch is an integer number of drums fixate by you.The cost to produce one batch equals $1500 plus the number of drums in the batch times $1000. For example, the cost to produce a batch of 10 drums is $1500 + (10)$1000 = $11,500. The batch of finished drums is shipped from the factory to the warehouse as shortly as intersection of the batch is completed. The drums can be shipped either by truck or one at a time by mail. One truck can carry 200 drums. One truck making a trip from the factory to the warehouse be $15,000, irrespective of how full the truck is. It costs $150 to mail one drum from the factory to the warehouse.Transportation times from the factory to the warehouse are 7 eld for the truck or 1 day for mail. There is no working limit to the number of drums a warehouse can hold. Both the costs of producing the batch and then shipping it to the warehouse are incurred as soon as output signal of the batch starts. If there is insufficent cash to pay for the production and shipping of the batch, the factory will remain idle. Production of a batch is triggered when the finished goods inventory (both en route to the warehouse and in the warehouse) run below the order point, which is set by you.Jacobs pays insurance and other out-of-pocket holding costs on chemicals once production is complete. 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 aggroup has been hired to manage the supply range for the Jacobs Industries. You can make the avocation 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 factorys production batch size. Whether batches are transported to the warehouse by mail or by truck. Your objective is to increase 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 one-half an hour after it started. During tha t time you can access your supply chain any time of the day or night. The winning team up 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 daytime 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 legal transfer