Ordering Exercise Instructions

Transcription

Ordering Exercise Instructions
Tenant:
_____________
User:
_____________
Password:
_____________
Summary:
Demand: 10 cases with standard deviation of 1 case
Ordering Cost: $10
Inventory Holding Rate: 20% of COGS
Sales Price: $35.00 per case
COGS: $24.00 per case
©2015 ScrimmageSIM LLC
Open your browser to the web site scrimmagesim.com, then click on LOGIN:
Click on LOGIN
Enter your account information (Tenant, UserId and Password) then click on
Login:
Enter account data
Click on Login
If this is your first time logging into the system, you will be required to reset your
password:
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Reset Password
After resetting your password, you will be at the main menu. Click on Scenarios:
Click on Select Scenario
This will produce the following screen:
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Select the Waldo Mart Reordering Scenario
Note: There may be a number of Scenario
Options
Selecting the Waldo Mart Reordering Scenario will produce the following screen,
which lists the nine runs available for your simulation. You can change the
description of the run to help you manage your different simulation runs. Do this
by clicking on the pencil icon in the data grid:
Click on the pencil icon to edit the description
Type the new description, then click on the save icon:
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Type new description, then click on the save icon
Now select the first run by clicking on Select:
Select first run
With the scenario and run selected, the main menu of the simulation is displayed,
along with the container details (tenant, scenario and run):
Container details
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To look at the demand history, select Orders under the Demand menu:
Select DemandàOrders
This will display the order history for the previous year. Note that the demand
comes from a normal distribution with mean = 10 and standard deviation = 1:
Note that the data is split to multiple pages
Click Back to go back to the main menu
After returning to the main menu, you can display the order history graphically by
following the menu path DemandàGraph:
Select DemandàGraph
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and you will get the following screen:
This screen allows you to plot the inventory levels for up to 5 materials at one
time. In this simulation, there is only one material. To graph the demand for the
AliCat Ale, select it from the first pull-down list:
Select AliCat Ale
Then click Draw Graph:
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Click on Draw Graph
This will produce the following graph:
Click Back to go back to the main menu
Click Back to get back to the main menu, then follow the menu path
InventoryàStatus:
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Select InventoryàStatus
Note that the initial inventory
for the simulation is 150 cases
Click on the Open Window icon to keep this screen open and work in a new tab:
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Click on Open Window to get another
window as a second tab
ScrimmageSIM operates like an ERP system, where you can have multiple
windows accessing different transactions in the system. With the new window,
follow the menu path:
InventoryàHistory Graph
Select InventoryàHistory Graph
This will produce the following window:
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This window will show a graph of the inventory level for up to five different
materials (products) during the simulation. Select AliCat Ale from the first pulldown list and then click on Draw Graph:
Select AliCat Ale, then click on Draw Graph
The graph currently shows just one data point as the simulation is at the
beginning for this run:
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First data point
Click on the Open Window icon to get another browser tab:
Click on Open Window to get a new tab
Then select the menu path ResultsàFinancial Statement:
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Select Resultsà Financial Statement
This screen provides an income statement and balance sheet for Waldo Mart:
This statement shows only the basic items needed to support the simulation.
The company stats with the asset of 150 cases of AliCat Ale, which have a value
of $3,600 ($150 x $24.00 = $3,600.00).
For this scenario, manually advancing the simulation time will produce the best
results. To do this, open a new window and use the menu path
SimulationàManual:
Select Simulationà Manual
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Click on Increment Time
This screen allows the user to advance the simulation one increment at a time.
In the case of the Waldo Mart simulation, the time increment is equal to one day,
so clicking on the Increment Time button advances time one day. Clicking
Increment Time produces the following screen:
Time has advanced one day
Switch to the Inv Status tab to view Waldo Mart’s Inventory:
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Inventory still shows 150 cases, as
the screen does not automatically
update. Click update to refresh the
data shown on the screen
Clicking on update produces the following inventory status report:
Inventory is now 140 cases
Switch to the Inventory History tab:
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Click on the Draw Graph
icon to refresh the data
Clicking on the Draw Graph icon will refresh the graph data:
The graph now shows the
change in inventory
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Finally, click on the Financial Statement tab:
Click on Refresh to
refresh the data
Click on the Refresh icon to refresh the financial statement data. Note that there
are changes to the financial statement. In the income statement, there is now a
gross margin figure and an expense figure:
Click on Refresh to
refresh the data
Click on the + symbols
to expand the display
Click on the + symbols to expand the display:
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Gross margin is the Sales Revenue
minus the Cost of Goods Sold
Inventory and Order Expense
The Net Income figure is sales of AliCat minus the cost of the AliCat that was
sold (COGS). AliCat is purchased for $24.00 per case and sells for $35.00 per
case. With 10 cases sold the first day, the gross margin is $350 - $240 = $110.
The income statement shows two expenses: Inventory and Order. In practice,
these expenses are not shown explicitly on the income statement, but for this
scenario we are showing these as the only two expense items for WaldoMart to
illustrate the tradeoffs made in determining order quantities. The expense of
keeping a year’s worth of inventory is estimated as 20% of the value (cost) of the
inventory. Therefore, the inventory expense for the first day of the simulation is
calculated as:
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 =
150 𝑐𝑎𝑠𝑒𝑠 $24/𝑐𝑎𝑠𝑒 0.20 𝑓𝑟𝑎𝑐𝑡𝑖𝑜𝑛/𝑦𝑒𝑎𝑟
= $1.97
365 𝑑𝑎𝑦𝑠/𝑦𝑒𝑎𝑟
The other expense for this scenario is the ordering expense. This is the cost that
is associated with ordering and receiving the product—AliCat Ale. This cost is
estimated at $10 per order. There have been no orders placed yet, so this cost
is zero.
Expand the Owner’s Equity entry in the Balance Sheet:
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Expand the Owner’s
Equity entry
Note the change to the owner’s equity:
The Owner’s Equity is increased
by the net income amount, which is
shown as Retained Earnings
The net income of $108 has increased the value of WaldoMart, and that
increased value is shown as retained earnings.
Return to the simulation tab, then advance the simulation to January 6:
Click on Increment Time until it is January 6
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Switch to the inventory history screen and click on Draw Graph to update the
date:
Click on the Draw Graph
icon to refresh the data
You can see the inventory is decreasing in a fairly linear (straight line) manner.
Continue incrementing the simulation time and checking the inventory history
until the inventory level is below 30 cases:
Click on Increment Time, checking
the inventory levels with the Inventory
Status or Inventory History screens
Switch to the Inventory Status tab to confirm your inventory level:
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Inventory is below 30
Click on Open Window to get a new tab
Click on Open Window, then in the new tab select Purchase from the menu:
Select Purchase
Current Order Quantity is 150. This
can be changed using pencil icon
The order quantity can be changed using the pencil icon in the same way the run
description was changed. We will leave the order quantity at 150 for now, so to
place the purchase order, click on Purchase:
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Click on Purchase
and the purchase order is created:
Purchase Order is created
Switch to the Run Simulation tab and increment the simulation one day:
Increment the simulation one day
Switch to the Inv Status tab and click on Refresh:
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Click on Refresh and note the
purchase order has been received
Next, switch to the Inventory History tab and click Draw Graph to refresh the
data:
Click Draw Graph to refresh
Finally, switch to the Financial Statement tab, click on update and expand the
Gross Margin and Expenses entries:
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Order Expense is now shown
Note there is now an Order Expense entry. Switch to the Run Simulation tab
and advance the simulation to February 1:
Increment the simulation to February 1
Then switch to the Inventory History graph and click on Draw Graph:
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Click on Draw Graph and note
the current inventory level
Switch to the Inv Status tab and update the data:
Note that there are only
6 cases in inventory
In this scenario, if there is not enough inventory to fulfil the daily demand, no
cases will be sold that day. To see what sales have been lost, click on the Open
Window icon and then select the menu path InventoryàLost Sales:
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Select InventoryàLost Sales
This will bring up the following screen:
Note that are were 21
cases of lost sales
Lost sales have a significant impact on net income. With a sales price of $35 per
case and a COGS of $24 per case, not selling 21 cases will cost
$35 − $24 x 21 = $231
so a simulation run with lost sales WILL NOT deliver the highest net income.
Because the simulation will not turn out to be the lowest cost, we should start
over. To do this, click on the Run Simulation tab and click on Back:
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Click on Back
To start over with this run, follow the menu path SimulationàRebuild Run:
Select Simulationà Rebuild Run
and click OK on the popup window:
Click OK
Select the Inventory History tab and then click on the Draw Graph icon to
confirm that the simulation has been reset:
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Run The Simulation
Operate the simulation, placing purchase orders when necessary, until the
simulation time is April 1:
Simulation is complete on April 1
To save the results of the simulation for grading, click on Back to get to the main
menu and then follow the menu path RunàSave as Graded:
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Select Runà Save as Graded
Select the first run, which is the run we were using:
Select First Run
Clicking on Select will produce the following confirmation screen:
Click on Back
Click on Back:
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Click on Back again
Then click on Back again to get to the main menu and follow the menu path:
ResultsàStudent Ranking
Select Student Ranking
This student ranking will allow you to compare your graded run to those
submitted by your colleagues. The report is sorted by net income as the default:
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Managing Simulation Runs
You have nine simulation runs with which to experiment, and one graded run.
You cannot select the graded run directly: you can only save one of your nine
runs as the graded run.
After your first run, use a different run to try a different strategy—in this scenario
try a different order quantity. To select a new run, follow the menu path:
RunàSelect Run
Remember that you can rename the run to help you manage your different runs
and strategies:
Name run to record order
quantity as strategy
TRY DIFFERENT STRATEGIES TO FIND THE ORDERING STRATEGY THAT
MAXIMIZES NET INCOME. DO NOT SUCCUMB TO THE IDEA THAT YOUR
SOLUTION IS “CLOSE ENOUGH.”
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Ordering Exercise Instructions

Transcription

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