Supply Chain Simulation

The Market Jacobs Industries lonesome(prenominal) product is an industrial chemic that basin be mixed with air to form a scintillate that is Lightweight Stable over a very wide of the mark 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 atomic number 18 each(prenominal) located in the region of Calopeia. They purchase the foam chemical as a substitute for competitors products. If Jacobs coffin nailnot ship an order within 24 hours of receiving the order from the customer, the customer makes its purchase from a competitor without any departure of future demand.The chemical is shipped in small charge plate drums at a price of $1450 a piece. Demand for the chemical is highly seasonal hardly otherwise very stable. There are no long-run securities industry trends, either upward or downward. The size of orders is very random, with an ave rage size of 7 or 8 drums. Orders arrive randomly throughout apiece 24-hour solar twenty-four hour period. It is now daytime 730, two courses after Jacobs began producing and marketing the chemical. A new foam engine room is in development at Jacobs that testament render all production aptitude 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 come to zero on day 1460. Operations and Finance Jacobs distribution electronic network consists of a single grind and a single storage wareho single-valued function, both in Calopeia. The warehouse only supplies air conditioner retrofit kit manufacturers, who are all in Calopeia. Jacobs attains its chemical in weedes, 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.The cost of fulfilling an order, including the cost of mailing the drum to the customer, is $cl per drum. The current capacity of the factory is 20 drums per day. More 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 total of 30 drums per day would be (10)$50,000 = $500,000. skill costs are incurred as soon as the capacity involution begins. It takes 90 days to complete a capacity elaboration. Capacity cannot be retired. Production in factories is carried out in batches, where each batch is an whole number number of drums set 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 sinless drums is shipped from the factory to the warehouse as soon as production of the batch is completed. The drums can be shipped either by truck or one at a time by mail. One truck can slobber 200 drums. One truck making a trip from the factory to the warehouse costs $15,000, regardless 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 days for the truck or 1 day for mail. There is no practical 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 production of the batch starts. If at that place is insufficent cash to pay for the production and shipping of the batch, the factory will repose idle. Production of a batch is triggered when the finished goods inventory (both en send off to the warehouse and in the warehouse) fall below the order point, which is set by you.Jacobs pays insurance and other out-of-pocket holding costs on chemicals erstwhile production is complete. These holding costs for one drum for one course of instruction equal $100, whether the drum is en route to a war ehouse 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 grasp 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 factorys 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 peppy will end and all inventory and capacity will be obsolete. The simulation will run continually at the rate of 104 bogus days per real day, or 1 simulated day more or less every 14 minutes.You will have control of the game from day 730 to day 1460, or 730 days total. The game will concl ude 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 evening 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 delivery