Sales, Inventory, and Operations Planning Game

You began working for Widgets Inc. this January with the objective of increasing the sales volume for the product. While you work with the Vice President of Marketing, your position is officially independent and focused on the acquisition of large volume customers. Your team made a major break-through this summer by acquiring a new and very large customer, Procura GmbH. Your team estimates that this customer would add a volume of about 500 units in sales every month! Given that the average demand for the product last year was just 450 units per month, this achievement is a major break-through in the commercialization of the product. You had a brief phone call with the Vice President of Operations in July, asking him whether s/he would be ready to ship more product and s/he replied that his/her warehouses were filled to the maximum. You therefore gave the go-ahead to your team, and they signed the contract with the new customer. So far, Procura has ordered 200 units in August, and 300 units in September. Overall sales look pretty good, and you definitely beat the forecast this month, as you can see in the chart below:

Figure 1: Demand for Widgets in 2013

1000 900 800 700 600 500 400 300 200 100 0 

Actual Unit Sales

Forecast Unit Sales

Jan Feb Mar

Apr

May Jun

Jul Aug Sep

The CEO seems to be happy overall with your performance so far. Your objective for the next few months is to make sure that you can develop the relationship with Procura further to increase sales from this account so make sure that you have enough product to ship to your new customer. Maybe you can negotiate priority terms with the VP of Operations to give Procura preferential treatment if product shortages should occur.

(see back of the page for political capital information)

Possible Actions:

You can call your contacts with Procura to lower their overall demand for a month. Doing so will cost you 2 points of political capital, and lower demand from Procura by up to 200 units (your choice) in that month.

Objective:

Every 200 units (round up) shipped to Procura in a month will earn you 1 political capital. Every 100 units (round up) of demand by Procura that is not shipped in a month (but backlogged) will cost you 3 political capital.

Note that the political capital you loose and earn as a result of these possible actions is tracked in the Excel spreadsheet.