2. IS/IT for Managers Discussion 4: FFTW - Introductions 2010-2011 T3 SIDI-31135

3. Overview First run of the business game, Flowers For The World: ▫An attempt to give everyone a common ground for understanding the business processes that are to be supported ▫Each group must work out the information system that will allow the proper flow of information between each group member  Probably, you will work it out as you play! 2

4. Experiential Learning Learning by doing But, the person must be willing to: ▫Be actively involved ▫Be able to reflect on and analyze the experience ▫Use problem solving skills to make the best use of the new ideas gained 3

5. And … 4

6. Part 1 Introducing the Company 5

7. Flowers For The World Small, horticultural import/export and distribution company: ▫Founded in 1911, headquarters in Cergy ▫Flowers bought at auction each week ▫Sold directly to customers through a string of partnerships (flower shops) ▫Flowers stored in a refrigerated warehouse in Cergy (max. 3 weeks) Since 1994, specializes in the sale of Roses, Irises, and Daffodils 6

8. Roses, Irises, Daffodils 7

9. Management Structure 8 CEO Financial Manager Sales Manager Purchasing Manager

10. Aalsmeer Flower Auction 9 999.000m 2

11. The Flower Auction Auctions are held in Aalsmeer, Holland, at 04h00 every Monday morning: ▫Flowers are offered in varying number of lots, where each lot is 100 flowers (2 lots of Roses = 200 Roses) Bids are made for each set of flowers (2 lots, etc.): ▫The auctioneer has a minimum sale price Once bought, the flowers cannot be returned: ▫Payment is due before the end of the week ▫Failure to pay means a one-week suspension 10

12. Sale to Customers Flower shops open at 09h00: ▫Which is after the auction closes Our customers (partners) send enquiries for N number of flowers FFTW responds with a quotation giving price per flower: ▫Customers will haggle over price ▫Default delivery of “within 2 weeks” 11

13. Profit and Loss Statement By law, a profit/loss statement is required at the beginning of each week, summarizing the trade for the previous week: ▫Failure to submit the statement to the local bureau commercial will result in a series of fines:  First offence, 250 €  Second offence, 1.000 €  Third offence, suspension of company activities 12

14. Part 2 How We Play the Game 13

15. Timeline of Activities 14 One “week” = 20 mins Auction begins Customer orders P/L Statement due First bid Second/ third bid First quote Second quote

16. Example: The Auction 2 lots of Roses: ▫You offer 100 € (Min. price 90 €), you win! 2 lots of Irises: ▫You offer 90 € (Min. price 100 €), you lose! 3 lots of Daffodils: ▫You offer 1.000 € (Min. price 1oo €), you win? 15 NOTE: It doesn’t matter how many lots there are, matching the minimum auction price is the key. Will not change more than ±10 € a week. Want to see in this order!

17. Be Careful! Let’s say 2 lots of Roses sold for 90 € at auction last week If this week there are 4 lots of Roses for sale and the market price hasn’t changed, the price will be: 16 90 €

18. Example: Customer Enquiry Request 85 Roses: ▫1,00 € per Rose (Max. price 1,00 €), you win! Request 30 Irises: ▫0,10 € per Iris (Max. price 0,05 €), you lose! Request 50 Daffodils: ▫0,20 € per Daffodil (Max. price 0,55 €), you win? 17 NOTE: Max. price will not change more than ±0,50 € a week. Want to see in this order!

19. Delivery Note A delivery note must be submitted (to me) before the end of the agreed week: ▫Group 1, Delivery in Week 4 from Week 2, for Customer 1, 85 Roses@1,oo ▫No partial deliveries (e.g., 40 of the 85) Once the delivery note has been received the money is in your account: ▫Failure to submit the delivery note (or on-time) means the order is cancelled! 18

20. Opening Position Roses: ▫100 (1 lot), good sales, selling at 1,00 € per flower Irises: ▫50, poor sales, selling at 0,05 € per flower Daffodils: ▫50, average sales, selling at 0,55 € per flower Bank balance: ▫1.000 € 19

21. Costs Flowers: ▫Auction price Storage: ▫25 € per 100 flowers (or part thereof) per week ▫Flowers can only be stored up to 3 weeks, and must be discarded once 4 weeks old  Flowers bought and sold in the same week do not incur any storage costs Advertising: ▫25 € per week 20

22. Example: P/L Statement Opening balance: 1.000,00 € ▫Stock: 100 Roses, 50 Irises, 50 Daffodils (all 2 weeks old) ▫Income: 0 € ▫Storage cost: (50 €) ▫Advertising: (25 €) Closing balance: 925,00 € 21

23. Important! Auction bids and customer enquiries must list the flowers in order: ▫Roses, Irises, Daffodils (create forms?) Put your group number on everything you submit: ▫Anything that is not readable will be discarded! You cannot exceed an overdraft of 250 €: ▫Must declare bankruptcy and withdraw from the game 22

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25. Part 3 Let’s Play!! 24

26. Week 1 Auction 3 lots of Roses 5 lots of Irises 2 lots of Daffodils 25

27. Week 1 Customer Enquiry Customer 1: ▫258 Roses ▫104 Irises ▫130 Daffodils Customer 2: ▫120 Roses ▫111 Irises ▫249 Daffodils 26

28. Week 2 Auction 2 lots of Roses 5 lots of Irises 5 lots of Daffodils 27

29. Week 2 Customer Enquiry Customer 1: ▫309 Roses ▫251 Irises ▫170 Daffodils Customer 2: ▫100 Roses ▫211 Irises ▫142 Daffodils 28

30. Week 3 Auction 0 lots of Roses 9 lots of Irises 3 lots of Daffodils 29

31. Week 3 Customer Enquiry Customer 1: ▫25 Roses ▫155 Irises ▫40 Daffodils Customer 2: ▫80 Roses ▫115 Irises ▫33 Daffodils 30

32. Week 4 Auction 2 lots of Roses 5 lots of Irises 5 lots of Daffodils 31

33. Week 4 Customer Enquiry Customer 1: ▫30 Roses ▫198 Irises ▫20 Daffodils Customer 2: ▫44 Roses ▫222 Irises ▫14 Daffodils 32

34. Week 5 Auction 9 lots of Roses 1 lots of Irises 2 lots of Daffodils 33

35. Week 5 Customer Enquiry Customer 1: ▫222 Roses ▫111 Irises ▫10 Daffodils Customer 2: ▫320 Roses ▫231 Irises ▫200 Daffodils 34

36. Week 6 Auction 9 lots of Roses 1 lots of Irises 2 lots of Daffodils 35

37. Week 6 Customer Enquiry Customer 1: ▫258 Roses ▫104 Irises ▫130 Daffodils Customer 2: ▫120 Roses ▫111 Irises ▫249 Daffodils 36

38. Week 7 Auction 0 lots of Roses 6 lots of Irises 6 lots of Daffodils 37

39. Week 7 Customer Enquiry Customer 1: ▫410 Roses ▫344 Irises ▫50 Daffodils Customer 2: ▫220 Roses ▫25 Irises ▫29 Daffodils 38

40. Week 8 Auction 2 lots of Roses 0 lots of Irises 2 lots of Daffodils 39

41. Week 8 Customer Enquiry Customer 1: ▫28 Roses ▫14 Irises ▫13 Daffodils Customer 2: ▫12 Roses ▫11 Irises ▫29 Daffodils 40

42. Week 9 Auction 3 lots of Roses 5 lots of Irises 2 lots of Daffodils 41

43. Week 9 Customer Enquiry Customer 1: ▫258 Roses ▫104 Irises ▫130 Daffodils Customer 2: ▫120 Roses ▫111 Irises ▫249 Daffodils 42

44. Week 10 Auction 5 lots of Roses 3 lots of Irises 6 lots of Daffodils 43

45. Week 10 Customer Enquiry Customer 1: ▫158 Roses ▫222 Irises ▫111 Daffodils Customer 2: ▫161 Roses ▫233 Irises ▫222 Daffodils 44

46. Week 11 Auction 2 lots of Roses 2 lots of Irises 5 lots of Daffodils 45

47. Week 11 Customer Enquiry Customer 1: ▫52 Roses ▫208 Irises ▫30 Daffodils Customer 2: ▫100 Roses ▫208 Irises ▫90 Daffodils 46

48. Week 12 Auction 3 lots of Roses 5 lots of Irises 2 lots of Daffodils 47

49. Week 12 Customer Enquiry Customer 1: ▫258 Roses ▫104 Irises ▫130 Daffodils Customer 2: ▫120 Roses ▫111 Irises ▫249 Daffodils 48

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