ERPsim Post Game AnalysisByVigneswaran PadmanabanBernice SomnathKaushal MandayamRohan Vashisht

Chapters

1. Our Initial Strategy

2. Rounds I, II & III

3. Final results

4. So what went wrong?!

5. Scope for improvement

1. Our Initial Strategy

• Invest $167,000 and reduce setup time to 8 hours

• BOMs: 5 variants in 500g boxes and 1 variant in 1Kg box

• Selling Price = COGS + $2.5/$2.4/$2.3 in DC14, 12 & 10 respectively

• Advertise one product per region. Allowance: $15 per product per day

• Forecast initially for 50,000 boxes each in all variants

• Maximize profits with minimal production

• Manufacture the products that we solely dominate or have the least sales in the market

2. Round I

• Found we had strong market share in 500g Original & 500g Raisin

• Shifted production from 6 to the above 2 variants

• Ran periodic MRP

• Lost focus and delayed MRP – no production for almost 2 days

• Market domination - set S.P. above market average

• Net Income - $634,851 (Gross Margin: 69.3%, Net Margin: 34.8%)

• Productivity – 72.7%

Round I Production

Round I Sales & Pricing

Round II

• Found 1Kg Mixed Fruit had least sales in Round 1. So altered BOM

• Focused on 1Kg Mixed Fruit & 500g Original Muesli

• Competitor for 500g Muesli – matched S.P. to market average

• 70% of total market sales in 1Kg Mixed Fruit - set S.P. above market average

• Net Income - $1.9 million (Gross Margin: 69%, Net Margin: 41%)

• Productivity – 94%

Round II Production

Round II Sales & Pricing

Round III

• Found 500g Mixed Fruit Muesli had least sales in Round 2. Altered BOM

• Focused on (500g +1Kg) Mixed Fruit & 500g Original Muesli

• Big bet – 250,000 boxes of 500g Mixed Fruit in one stretch

• Increased advertising and slashed prices. Yet less sales till 29th day.

• 1Kg Mixed and 500g Original sales save the day!

• Net Income - $3.13 million (Gross Margin: 64%, Net Margin: 43%)

• Productivity – 89%

Round III Production

Round III Sales of 500g Mix Fruit Muesli

Round III Sales & Pricing

3. Final Results

• Second highest net income - $3.1 million

• Highest gross margin - 64.4%

• Highest net margin - 43.34%

• Least warehouse expense - $9,750

• 1Kg Mixed Fruit Muesli - 71% of total market sales

• 500g Original Muesli - 43% of total market sales

4. So what went wrong?!

• MRP for 250,000 boxes of 500g Mixed Fruit in one stretch

• Exponential advertisement expenditures by Team Y

• High volume sales by Team Z in Round 3

  Raw Materials Warehousing Sales Revenue

Team T 723,099.60 2,750.00 2,619,112.05

Team Z 1,141,965.47 186,700.00 3,662,166.02

5. Scope for improvement

• Data about average market expenditures for advertising

• Lumira – crashes frequently and does not support multiple windows

• Data about competitor recipes

Thank you!