SCM 386 – Simulation Report 1 Team Michigan
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Eastern Michigan University *
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Industrial Engineering
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Jan 9, 2024
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SCM 386 – Simulation Report 1
Simulation Report 1
Team Michigan
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SCM 386 – Simulation Report 1
Hormone View and Circulation Monitor Pricing
The first thing we did when the simulation opened was read the PDF that was provided to
us and click around the simulation to get a better understanding of how it works and what information would need to be adjusted each day. Once we had a good understanding, we decided
to tackle the pricing of our first product named “Hormone View (H+)”. We knew that the amount of money the customer is willing to pay is random for a monitor so setting a retail price would be something we would need to constantly adjust to find the right price. We wanted to make sure we didn’t price the monitor too high because we did not want to lose customers forever. We also wanted to make sure that we had the maximum number of customers buying our monitors over our competitors. When deciding our initial price for Hormone View, we decided on $400 because we wanted to increase the amount slightly but did not want to make it too high where we would lose customers. Throughout the simulation, we decided to slightly lower or raise it according to information we received from the scoreboard, the units on hand (Table 1), retail sales (Table 2), and the amount our competitors were pricing theirs at (Table 1). We tended to keep the price around $300 because that’s where we saw the best results (Table 3).
For the unique product, our team was assigned a Circulation Monitor. Again, we knew that the amount of money the customer was willing to pay for our Circulation Monitor was random, so we had to be mindful of how high we priced it. Additionally, we wanted to make sure
we made enough money, so we didn’t need to receive an emergency loan to continue operations. When deciding our initial price for the Circulation Monitor, we decided to price it at $400 because we wanted to see where our ending cash balance would be before deciding to increase or
lower the price. What we found was that our inventory was selling rapidly so throughout the simulation we increased our price. We also looked at information from the scoreboard, the units on hand (Table 1), retail sales (Table 4), and the amount our competitors were pricing theirs at (Table 1). We tended to keep the price around the $500 range because that’s where we saw the most amount of revenue without losing customers (Table 5). Our biggest competitors were Wisconsin, Iowa, and Arizona. We were in 4th place up to the last quarter where we jumped up to third before the simulation ended.
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SCM 386 – Simulation Report 1
Reorder Point
During the initial phases of our simulation, we observed that the demand patterns for both
the Hormone View and the Circulation Monitor were quite comparable. Given their modest demand at the outset, we strategically set a conservative reorder point of 25 batches for each product. This decision was based on our preliminary analysis and aimed to strike a balance between inventory holding costs and service levels.
However, around day 280, the dynamics began to shift. The Hormone View experienced
a marked surge in demand, which we hadn't anticipated. This uptick quickly led to frequent stock-outs, compromising our service standards. Recognizing the need for adaptability, we promptly revised our strategy by adjusting the reorder point to 30 batches. This increment was designed to accommodate the newly observed demand patterns and prevent future stock-outs.
But as the simulation progressed, the unpredictable nature of demand became even more
pronounced. Within a mere span of the next 100 days, the demand for the Hormone View rose steeply yet again. To safeguard against the risk of potential stock-outs and ensure a consistent supply for our customers, we took a bold step. We significantly increased our reorder point to 50 batches, thereby building a robust safety stock buffer (Table 6). This strategic move was pivotal in preparing us for any subsequent unexpected demand surges.
On the other hand, the Circulation Monitor's demand trajectory was a study in contrast. It remained relatively stable and predictable throughout the duration of the simulation. Given its consistency, we saw no compelling reason to make drastic alterations. Consequently, we comfortably maintained a steady reorder point, oscillating between 25 and 30 batches, ensuring its availability without overburdening our inventory (Table 5).
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SCM 386 – Simulation Report 1
Table 1: Hormone View Units on Hand and Competitor Pricing
Table 2: Hormone View Retail Sales
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SCM 386 – Simulation Report 1
Table 3: Hormone View Retail Pricing
Table 4: Circulation Monitor Retail Sales
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SCM 386 – Simulation Report 1
Table 5: Circulation Monitor Retail Pricing
Table 6: Hormone View and Circulation Monitor On-Hand Inventory
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