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Jacob Industries Simulation Report 2014

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Information about Jacob Industries Simulation Report 2014
Investor Relations

Published on March 12, 2014

Author: jasookram

Source: slideshare.net

Description

Always use proper forecasting techniques when planning expansion in factory capacity and anticipating demand.
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SIMULATION REPORT Jacob Industries

Team 0 500 1000 1500 2000 2500 3000 3500 0 200 400 600 800 1000 Cash Balance Cash

Too Much Factory Capacity On day 859, a decision was taken to increase the current factory capacity from 20 barrels a day to 80. Cost Savings $3MM

Inefficient use of the Mailing Option On day 856, a decision was taken to change the delivery option from truck to mail. A total of 9600 barrels were mailed from day 859 t0 979. Cost Savings $0.8MM

High Levels of W.I.P Maintained For the period 859 to 1004 The reorder point increased to 400 on average. Cost Savings $4.9MM.

What To Do?

Option 1

Option 2

ACTION PLAN 1. Shift System: on average 35 days. 2. 7 day Moving Average Forecasting Technique. 3. Demand more than 100bbls = Trucking 4. Demand less than 100bbls = Mailing

Where We Got To 0 500 1000 1500 2000 2500 3000 3500 0 500 1000 1500 2000 Cash Cash

Closing Cash Position On day 1460 Jacob Industries Closing Cash balance $2.95MM

What about those Cost Savings?

Post Mortem Issue Issue Projected Cost Saving ($MM) Too much factory capacity 3.0 Inefficient use of mailing option 0.8 High Levels of W.I.P 4.90 Foregone Interest 0.87 Total 8.7 Projected Closing Balance 12.52

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