Management simulation game

1. Management simulation game Furniture production http://www.mendelu.cz/~manage/index.php

2. Most important parts of the simulation • Marketing • based on market research (future market potential). • Sales • product mix and determination of price are very important. • Planning and production • desks and cabinets, production is planned quarterly. http://www.mendelu.cz/~manage/index.php

3. Most important parts -continued • Procurement • raw materials are used: metal and synthetics. • Human resource management • recruiting and firing employees, • their wages and training. • Finance • profit, CF, cost, revenue, turnover http://www.mendelu.cz/~manage/index.php

4. Previous development • You are at the beginning of the first quarter of the new year (5th quarter). • The development in the previous year is described in the materials. • Together with you there are other 4 firms with the same starting position. http://www.mendelu.cz/~manage/index.php

5. Previous development - continued Given factors: • stock of final products ready to be sold; • available production capacity; • number of employees; • stock of raw materials. http://www.mendelu.cz/~manage/index.php

6. Future development • So far you don’t have any information about the future development; • Therefore you should do a market research, • acquire information about the • potential sales, • the development of raw-materials’ prices for the next four quarters. http://www.mendelu.cz/~manage/index.php

7. Market research can give you the following information: • Market potential for desks and cabinets in the following quarter for certain price; • Prices of raw materials (max 4 quarters in advance); • Prices of competitors (in the previous quarter); • Sales of competitors (in the previous quarter). http://www.mendelu.cz/~manage/index.php

8. Market potential • Level of demand under certain price; • Excluding the beginning of the simulation, you can acquire only once per quarter and only for one of the future quarters; • Price: 25 000 CZK per product and quarter. http://www.mendelu.cz/~manage/index.php

9. Other information • prices of raw materials can be acquired for the whole following year • price: 10 000 CZK per 1 quarter; • prices of competitors can be acquired only for the previous quarter • price: 5 000 CZK; • the volume of desks and cabinets sold by competitors can be acquired only for the previous quarter • price: 20 000 CZK. http://www.mendelu.cz/~manage/index.php

10. Sales • You can sell only those products, • which were produced or • were not sold in the previous quarter. • In case of potential sales higher than your offer, you loose your goodwill, which projects in the simulation into the costs connected with unsatisfied demand • 25 CZK per desk and 50 CZK per cabinet. http://www.mendelu.cz/~manage/index.php

11. Production • You can use 3 machines; • All are able to produce desks and cabinets; • Production is planned in 250 of machine-hours (see the following table). http://www.mendelu.cz/~manage/index.php

12. Production -continued http://www.mendelu.cz/~manage/index.php

13. Production cut-backs Can happen in case of: • lack of raw materials; • insufficient production capacity; • lack of workers. • When necessary, volume of production is adjusted to the available resources • gradual cutting by 250 hours of machine-time, first cabinets, then desks, etc. http://www.mendelu.cz/~manage/index.php

14. Procurement • Raw materials are ordered and delivered every quarter; • Time-delay between order and delivery is none, JIT; • In case of buying at least 100 thous. kg of any raw material in one quarter, the supplier provides 2 % discount; • Storage capacity is sufficient; • Storage costs are 0,5 CZK.kg-1. http://www.mendelu.cz/~manage/index.php

15. Human resource management You can decide about: • Wage index - can not be lower than 90; • Training - yes/no - 5 % of total wages; • Recruiting and firing employees • number of employees is unlimited; • they acquire wages immediately, but work from the next quarter; • if PI is under the industry average – extra costs of 5 thous. CZK per one recruited employee. http://www.mendelu.cz/~manage/index.php

16. Personnel index • Labour relations criterion; • Influenced by five variables: • wage level, • change of the wage level, • firing workers (more than 5 in 1 q.), • training, • influence of competition. http://www.mendelu.cz/~manage/index.php

17. Influence of variables on PI http://www.mendelu.cz/~manage/index.php

18. Influence of PI on sick-leave http://www.mendelu.cz/~manage/index.php

19. Finance • Equity: • cca 7,5 mil. Kč (3 mil. = shares), • changes = only by accumulating profits or covering losses. • External capital: • investment credit - on request, interest rate = 3 % per quarter (repayments start one year after acquiring, interests start immediately), • extended credit - given automatically in case of problems with liquidity; only for 1 quarter, interest rate = 10 % per quarter. http://www.mendelu.cz/~manage/index.php

20. Bankruptcy • In case of insolvency in two following quarters; • Significant negative influence on the total evaluation of the company; • Production and sales can freely continue – company liquidator http://www.mendelu.cz/~manage/index.php

21. GOOD LUCK!!! http://www.mendelu.cz/~manage/index.php