...Managing Internal Cost & Controlling – Developing & Maintaining Quality – Managing Operations JCT2 Supply Chain Task 1 Western Governor’s University Introduction My company name was Arete Sytems. Arete is an ancient Greek term meaning “excellence of any kind”. The choice of name was intended to represent the quality, high-end systems that we would produce. B1. Using Budgets and Pro-Forma Statements to Plan Production Capacity One of my key lessons from this simulation was the importance of working in teams and openly discussing decisions that need to be made before making them. I approached the simulation as the only team member because the simulation didn’t include other participants. In retrospect, I would have assigned other members, at least in my mind, to gain additional team insights. I was not careful enough in setting pricing for my two products correctly in the second quarter when we actually began sales. I priced my high end Mercedes line accidentally at the price I had planned for my mainstream Workhorse line and vice-versa. I did not look closely enough at my pro forma cash flow or income statements to recognize the forecasted loss and as a result did not dig deep enough to see the reasons and to make the adjustments in pricing. I was overly focused on cash at that point to fund production capacity. I discovered the error when evaluating second quarter actuals. Going into third quarter planning, I looked at the pro forma cash flow...
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...B1. During quarter 1 the company started with a budget of $2 million to get the company off the ground. From the initial seed capital, I was able to effectively plan and the company’s infrastructure using the Q1 balance, income and cash flow records. The financial allowances were budgeted for the opening of two sales offices, research and development, and fixed plant capacity. Based on a startup operating budget of $2 million, I was able to allocate a fixed plant capacity 1,625 units a quarter at cost of $600,000. Reviewing the cash flow balance sheets, the company was able to end the period with $810,000 positive balance and a negative cash flow of $590,000. Had the decision been made to increase the plant capacity the first quarter costing $1.1 million, the company would have been left with a negative cash balance, thus requiring additional funding to operate. As the company progressed through the quarters, careful analysis of the previous quarter accounting statement were undertaken to understand the current company cash flow versus total balance with combined assets and debt before allocating an operations budget plan. Using balance sheets along with pro forma statements allow the budget to be planned by projecting the impact to the cash flow in real time. Using the Pro Forma statements in conjunction with setting the cost of goods and the capacity of the manufacturing facility for quarter 2, the company was able to realize $1,810,000 in revenue, with a cost of $1,195...
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...Supply Chain Task 1 B.1 Pro-Forma and Budget Quarter 1 marked the launch of NeoTech. Two million dollars in capital was raised by selling company stock. This capital was used for the initial cost of the launch. Unlike later in the simulation, budget decisions in the first quarter were much easier to manage because costs were fixed, and the revenue guaranteed. Just over half million dollars was spent to open the first office and complete research and development. I determined the direction of NeoTech would be to focus on producing a high end computer as its marquee product and a mid-range/office computer as a secondary focus. Quarter 2 marked the first quarter where a product was produced, salesmen hired, and product sold. The most difficult decision in this quarter was finding the proper equilibrium between projecting sales of a new and unknown commodity, choosing the right amount of sales people and their compensation, and determining a competitive yet profitable price. Summarizing the decisions made in quarter 2, a total of 9 salesmen were hired at 55k annual salary. It was estimated that each salesman would sell at minimum 100 computers. The high end computer, “Engineo” was priced at $3799.00 with a $300 rebate. The “Neoffice” was priced at $2,000.00 with a $100 rebate. The cost per unit of the engine and Neoffice were $2,146 and $1,794 respectively. Based on the cost per unit and the predicted sales per salesman, NeoTech directed the production of 600 Engineo...
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...JCT2 TASK-2 A. Analyze your simulation results by addressing the following prompts (A1 through A4). 1. Explain how you determined your product design decisions in the simulation. I designed the first computer to have your basic components, office software, and word, excel, power point etc. Multimedia accessories, you’re standard desktop design with a 15” monitor standard keyboard and standard computing power. The cost, easy to use, what it will be used for, who will use it, how long it lasts and what is unique about it. This can be for the individuals that were just learning how to use a computer or for your high school students that just need a computer to help them with homework assignments that are on a fixed budget. The second one is designed similar to the first on but with a 17” monitor for the more advanced computer individual who works with spreadsheet or designs thus allowing them to have a wider screen to view their projects that they are working on this model would cost a little more due to the monitor size but still priced at a value that an individual can afford. 2. Discuss whether you would change the target markets you selected if given the opportunity to repeat the simulation. The two target markets that I had picked were NY-North American and Pairs-Europe the demand in these two market is very high and they are among the top two cities in the workhorse, Mercedes and Traveler sector I would have included...
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...JCT2 - Supply Chain Management This course supports the assessment for JCT2. The course covers 10 competencies and represents 3 competency units. Introduction Overview In this course, you will be challenged with learning about the integration of activities that comprise a supply chain, from manufacturing goods through retailer sales. Understanding and proactive management of a supply chain is a key skill set for today's business executive. This course focuses on supply chain and distribution channel decisions within a global environment. The Marketplace Business Fundamentals simulation will provide you with the opportunity to apply, in a setting that simulates a real-world environment, a variety of business decisions that must be made when managing a business as a component of a supply chain. Watch the following video for an introduction to this course: Note: View the video in full screen at 720p for best results. Competencies This course provides guidance to help you demonstrate the following 10 competencies: * Competency 326.1.5: Budgets The graduate utilizes budgets and a variety of pro-forma statements for planning and control purposes including analyzing cash flows to assure adequacy of funds for capitalizing on business opportunities. * Competency 327.3.1: Continuous Improvement and Quality Management The graduate applies quality management methods for continuous improvement and proposes various quality improvements in an organization. * Competency...
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...JCT2 Task 1 Supply Chain Management Western Oregon University A1. Cumulative industry results for last four quarters ending in quarter: 4 | | Minimum | Maximum | Average | Lean In Enterprises | Total Overall | 0.00 | 749.39 | 10.85 | 0.09 | Financial Performance | -73.50 | 211.50 | 8.54 | 0.41 | Market Performance | 0.00 | 0.65 | 0.10 | 0.39 | Marketing Effectiveness | 0.00 | 0.82 | 0.20 | 0.60 | Investment in Future | 0.00 | 468.30 | 1.01 | 2.73 | Wealth | -2.12 | 5.21 | 0.41 | 0.78 | Human Resource Management | 0.00 | 0.82 | 0.21 | 0.70 | Asset Management | 0.00 | 2.10 | 0.33 | 1.30 | Manufacturing Productivity | 0.00 | 1.00 | 0.22 | 0.49 | Financial Risk | 0.00 | 1.00 | 0.27 | 0.99 | A2. B1 Until Quarter four I did not fully grasp the purpose of the Pro forma statements. I did not understand that the pro-forma was a projection of your decisions that you were making in the current quarter. Had I closely analyzed my Pro forma statement in quarter two I would have seen that I had set my demand for my sales team at zero and overspent in production. My revenue was not enough to cover the cost of production and overhead. Just by doing the simple math using my Pro-forma sheet I could have quickly assessed that the Revenues of +$990,900 would not cover the Cost of production-$576,338 and an excess capacity cost of -$491,524. Q1 my largest investment was in $470,000 in the sales office. I chose to open offices in Tokyo and New York since the...
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...JCT2 Supply Chain Task 1 B 1. Evaluating my use of budgets and pro-forma statements to plan for production capacity In Ralph Estes's Dictionary of Accounting, a pro forma financial statement is defined as "a financial statement prepared on the basis of some assumed events and transactions that have not yet occurred." (Estes, 1981) Historical financial statements are used to measure an organization's past financial performance and condition. Without historical financial statements, financial analysis and evaluation would not be possible and management, board members, investors, and customers would be largely in the dark about how well an organization has done. Pro forma financial statements are similar to historical financial statements in appearance and use, except that they focus on the future instead of the past and are based upon assumptions rather than hard fact. According to CliveVlieland-Boddy “the construction of pro forma statements is based upon detailed financial projections and the historical relationships between different income statements and balance sheet accounts. A set of current financials serve as the foundation on which the pro forma will be built.” (Vlieland-Boddy, 2011) With starting a new company and brand, I did not have much in the way of current financials to use for helping create the pro forma statements initially. When I did start receiving the reports, the information was hard for me to use for projections due to the lack of a track record...
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...Supply Chain – JCT2 Task 1 Roy C. Vasel Student ID 000298533 Business Simulation for OutFront Computers A. Business financial documents from simulation | | |Cumulative industry results for last four quarters ending in quarter: 4 | | |Minimum |Maximum |Average |OutFront Computers | |Financial Performance |-47.33 |171.31 |1.98 |44.29 | |Market Performance |0.00 |0.60 |0.03 |0.58 | |Marketing Effectiveness |0.00 |0.81 |0.05 |0.75 | |Investment in Future |0.00 |38.98 |0.17 |1.39 | |Wealth |-0.57 |4.26 |0.11 |1.74 | |Human Resource Management |0.00 |0.82 |0.06 |0.78 | |Asset Management |0.00 |2.10 ...
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...JCT2 Task 3 A: Supply Chain Strategy The best strategy for this company in regards to supply chains is known by the Japanese term “Keiretsu”1. “It is part collaboration, part purchasing from few suppliers and part vertical integration.” Your manufacturing company would most “likely be a financial supporter of some or all of your suppliers through either ownership or loans. Members of the Keiretsu are assured long term relationships but are expected to collaborate as a partner, provide technical expertise, and stable quality production”1 to you. What this means to you is the ability to work with suppliers with a relative level of trust. This will allow you to work together on making your power tools a better product to the competition. In addition your company’s goals will be directly tied to the goals of your suppliers. You can share data, collaborate on business decisions, as well as standardize your products and processes. This makes the overall success of your company just as important to your suppliers as to yourselves. You will have to be mindful of a few things. The first is to keep an eye on your entire supply chain and make sure that all of the entities involved are aware of the overall goals. This will help keep the idea of “Local Optimization”1 in check. “Local Optimization”1 is the concept where a supplier or other entity is unaware of the overall goal and its importance and focuses on their own goals which could potentially sabotage the overall efficiency...
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