1. Case Study 3: Operate a Manufacturing Company (Introduction) EIN 6133 Logistics Engineering Summer B, 2015

2. Objective The objective of this manufacturing case study is to provide a hands-on experience of an integrated business process in the simulated environment, which integrates basic operation functions of planning, sales, production, procurement, marketing, and financial accounting for learning how to run a manufacturing operation and make business decisions.

3. The Virtual Business Environment Simulation of a market Automation of administrative tasks Simulation of the passing of time

4. Corporate Roles Designation CEO (Team Leader) ◦Review financial statement ◦Coordinate operating activities ◦Review price market report ◦Review summary sales report ◦Monitor sales and market data ◦Review inventory Report Sales & Marketing Manager ◦Change sales prices ◦Plan marketing expense ◦Provide advices to material manager for forecasting ◦Review sales and market data ◦Check summary sales report ◦Review price market report 4

5. Corporate Roles Designation Production Planning Manager ◦Create planned independent requirements ◦Run MRP to create: 1) purchase requisitions (PRs) for raw and packing materials, and 2) planned orders for finished products. ◦Convert purchase requisitions to Purchase orders ◦Track purchase orders ◦Analyze product cost Material Manager ◦Review planned orders for each product ◦Control and release production orders if required raw materials are available ◦Monitor production schedule ◦Track purchase orders ◦Check inventory report 5

6. Operations activities

7. Organizational elements

8. Organizational Elements

9. for Extended Mfg

10. Organizational Elements $$ - 10 - 00 10 12 14 $$ - 12 - 00 $$ - 14 - 00 00 for Extended Mfg $$

11. Master Data Used in this study

12. Definition of Master Data (1/2)

13. Definition of Master Data (2/2)

14. List of Master Data 2

15. Muesli Manufacturing Association Label Regulation

16. Muesli Cereals Raisins Oats Strawberries Wheat Blueberries Nuts

17. Your 6 products 40% wheat 40% oat 20% nut 1 box 1 bag 35% wheat 35% oat 10% raisin 10% nut 5% strawberry 5% blueberry 1 box 1 bag 50% wheat 50% oat 1 box 1 bag 40% wheat 40% oat 20% raisin 1 box 1 bag 40% wheat 40% oat 20% strawberry 1 box 1 bag 40% wheat 40% oat 20% blueberry 1 box 1 bag

18. Product Design and German Market

19. Data Model of product $$-F06 $$ $$-F06 $$-P01 $$-P02 $$-R01 $$-R02 $$-R03 $$-R05 $$-R04 $$-R06

20. German market North DC10: 2 retailers DC12: 19 retailers South DC10: 7 retailers DC12: 23 retailers West DC10: 3 retailers DC12: 17 retailers

21. Input Cost at Low Seasonal Price

22. Number of Stores by Geographical Area

23. DC10: Hypermarkets Buy only large boxes (1 kg) Payment delay of 20 steps More sensitive to price Less sensitive to advertising Will have a stronger preference for 3 particular products during the simulation

24. DC12: Grocery Chains Buy large boxes (1 kg) and small boxes (0.5 kg, only for Mfg Extended case) Payment delay of 10 to 15 steps Will have a stronger preference for 4 particular products during the simulation

25. Number of Retailers Per Locations

26. Risk Premium on Credit Ratings

27. Major Operation Rules You don’t change the recipe of a product in this mfg introduction game Customers’ preferences do not change throughout the game; you may like to learn from their past behavior The company displaying the highest shareholder’s equity at the end of the simulation wins the game You must behave ethically at all times The end of game inventory will be value at cost price in the final balance sheet. Therefore, you shouldn’t sell under cost at any time during the game.

28. Operations tips Develop your team’s operations strategy Monitor and modify the strategy, when necessary Use the ERP system efficiently Do not run out of stock Be aware of delays and production capacity constraints Team organization and communication are important.

29. Game Layout 30 steps 15 min 30 steps 15 min 30 steps 15 min

30. Game Rules Each round will be of 30 steps (approx 0.5 min per step) End-of-round inventory is carried over to the next round You can sell a product only if you have it in stock You compete against the other teams and importers Your objective is to maximize profit

31. Participant’s job Aid

32. Let’s Get Started! Create your team : 3 – 4 persons Up to 26 company : A to Z Develop your team’s operations strategy Log in using user name and password given by the instructor

33. Login Information Client 445 Login : $ # $ = Team, Pilot run: A, B, C, D Real run: E, F, G, H # = User 1 to User 4 Password: ERPSIM

34. SAP Menu & Navigation

35. Introductory Game: Round 1 30 steps 15 min

36. Cost, Inventory & Initial Pricing Material$$-F01$$-F02$$-F03$$-F04$$-F05$$-F06 Name Nut Muesli 1.0 kg. Blueberry Muesli 1.0 kg. Strawberry Muesli 1.0 kg. Raisin Muesli 1.0 kg. Original Muesli 1.0 kg. Mixed Fruit Muesli 1.0 kg. Raw material Cost€ 1.53€ 1.97 € 1.38€ 1.36€ 1.76 Standard cost€ 2.48€ 3.09 € 2.50€ 2.65€ 2.89 Initial price 10 12 € 4.24 € 4.49 € 5.18 € 5.43 € 5.18 € 5.43 € 3.92 € 4.17 € 3.87 € 4.12 € 4.75 € 5.00 Initial stock100,000

37. Initial Inventory in Round 1

38. Initial Financial Statement in Round 1

39. The Introductory Game: Round 1 (30 Steps- Days) You have initial inventory for each finished product (100,000 for each finished product) You will sell your available products in Q1. You can’t buy any raw materials in Q1. You can’t make plan, can’t run MRP, and can’t produce any finished goods in Q1.. You need to know how to : Maintain price list and make plan for marketing investment Watch available stock Monitor sales orders Monitor your profit !

40. Participant’s Job Aid & Menu

41. Maintain Prices for DC 10 & DC 12

42. Marketing Expense

43. Check product costing

44. Stock in Material Overview

45. Check Sales Summary Report in Your Company Code

46. Check Sales Order Report in Your Company Code

47. Check Market Report for All Company Codes

48. Check Financial Statements in Your Company Code

49. The Introductory Game: Round 1 (30 steps – 30 days) We start the simulator for 30 steps

50. Introductory Game: Round 2 30 steps 15 min

51. The Introductory Game: Round 2 (30 Steps- Days) You finished goods will be carried over to the round 2 if your still have inventory at the end of the round 1. You have initial raw materials which are enough to make 100,000 of your each product. You can’t buy any raw materials in Q2. Planned orders for all six finished products have been created by ERPsim. You can produce your products in Q2 by converting planned orders to production orders. You can’t change the planned orders, and can’t run MRP You continue to maintain your prices and make investment in market.

52. Game Parameters

53. Participant’s Job Aid & Menu

54. Release Production Order

55. Release Production Orders (CO41) 1.Select planned orders to be converted to production orders, and 2.Click on the button “Convert” to release.

56. Check Production Schedule

57. The Introductory Game: Round 2 (30 Steps - Days) We start the simulator for 30 steps

58. Introductory Game: Round 3 30 steps 15 min

59. The Introductory Game: Round 3 (30 Steps- Days) You finished goods and raw materials will be carried over to the round 3 if your still have inventory at the end of the round 2. You can buy any raw materials in Q3. You can produce your products in Q3. You need to 1)create independent requirement plan for your products, 2)run MRP to create purchase requisitions and planned orders, 3)convert purchase requisitions to purchase orders, and 4)release planned orders to production orders. You continue to maintain 1)Prices for finished products, and 2)make investment in market.

60. Participant’s Job Aid & Menu

61. Create Planned Independent Requirement for 6 Finished Products (MD61) AA-F

62. Forecasting Sales

63. Execute MRP

64. After the MRP Run

65. Convert to Purchase Orders from Purchase Requisitions (ME59)

66. Convert Purchase Requisitions to Purchase Orders

67. Track Purchase Orders

68. Purchase Order Tracking(ZME2N)

69. Raw Material Cost Per PO

70. Collective Conversion of Planned Order (CO41)

71. Release Production Order

72. Release Production Orders (CO41)

73. Check Production Schedule

74. The Introductory Game: Round 3 (30 Steps – 30 Days) We start the simulator for the last 30 steps