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Business Simulations
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Business SimulationThe Key to Understanding Business
David A. Jordan, CSI
Assoc Prof of Business and Engineering
Geneva College
• 20% of what is heard
• 40% of what is seen and heard
• 60% of what is done
• 80% of what is done and applied
Retention Statistics
• In Business Simulations (80%+)– Decision making/Analysis Cycle
What is Active Learning?
• Active Learners energetically strive to take a greater responsibility for their own learning.
• Students must engage in such higher-order thinking tasks as analysis, synthesis and evaluation.
• Active learning is fast-paced, fun, supportive and personally engaging.
• Above all students need to ‘do-it’!
BusSim® Family of Simulations
Integrative Case
MarketingHumanResource Operations Finance
Strategy
Introductory Introductory
Analytical
Comprehensive
I
II
III
BusSim Learning Model
DecisionMakerCasebook BusSim
Model
DecisionTools
Instructor
Periodic Decisions
Team Based
Support Materials
• Outdoor Unlimited, Inc. Case– Provides common company environment– Tailored to each module
• Spreadsheet Tools– Aids for data analysis
• Instructor’s Manual– Complete guide to program operation and
setup
Outdoor Limited, Inc. (Case)
• Manufacturing Facility• Functional Divisions
– Production– Marketing– Finance– Human Resources
OUTDOOR LIM ITED INC.
H RS p ec ia lis t
A d m in is tra tiveA ss is tan t
S a les R ep s
S a lesM an ag er
A d vertis in gS p ec ia lis t
V PM arke tin g
F ab rica to rsM a in ten an ceM at H an d le rs
F ab /M H /M a in tS u p erviso r
A ssem b le rs
A ssem b lyS u p erviso r
P rod u c tionM an ag er
V PO p era tion s
B ookkeep er
A ccou n tin gS p ec ia lis t
In fo S ys tem sS p ec ia lis t
V PF in an ce
P res id en tH R M an ag er
Organization Chart
Financial Statements
• Income Statement
• Comparative Balance Sheet
• Cash Flow Statements– Indirect (GAP)– Direct (Non GAP)
BusSim® uses an integrated set of Financial Statements in all the modules. Students need to understand management decisions in light of these statements.
Financial Statements
Simulations focus on presenting results as a set of integrated financial statements.
Outdoor Limited Products
• OutdoorPak
• SchoolPak
• SportPak
FRAMING STRAPPING CUTTING
Straps Cut Pieces
SH
IPP
ING
& R
EC
EIV
ING
Workstations Inventories
Manufacturing Process
Hardware
Fabric
Tubes
Frames
ASSEMBLY
Strategy Class at Geneva
• Capstone with 15 – 30 students
• 3 or 4 person teams (Concentrations)
• Simulation Runs ½ semester
• Annual Board Meetings (4)– Present Mission/Strategies/Function Goals– Results previous year/Plans for next year
• Two days between decisions
Goals for Class (Simulation)
• Enterprise Decision-Making– Budgets
– Long Term Planning
– Resources
• Functional Coordination– Marketing can’t sell what operations doesn’t produce
– Growth can’t occur without cash
• Function Decision-Making– Operational/Tactical Decisions within Enterprise
Example Requirements
• Business Planning (Quantitative)– Annual Plan
• Sales Forecast• Material Requirements• Human Resource Requirements
– Income/Expense Budget– Ratio Analysis– Cash Budget
Example Worksheet
INPUT PARAMETERS:
Average Labor Cost/Mo $1,000Hire Cost/Employee $600Fire Cost/Employee $500Carrying Cost/Unit/Mo $0.20Stockout Cost/Unit/Mo $2.00Average Productivity 1,000
Level
Initial Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Employees 30 30 30 30 30 30 30 30 30 30 30 30 30OvertimeProduction 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 360,000 Demand 24,000 24,000 26,200 28,300 29,400 31,800 37,300 35,900 29,000 28,000 29,000 23,000 345,900 Inventory 6,500 12,500 18,500 22,300 24,000 24,600 22,800 15,500 9,600 10,600 12,600 13,600 20,600
Reg Pay $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $360,000OT Pay $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Hire/Fire $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Inventory $2,500 $3,700 $4,460 $4,800 $4,920 $4,560 $3,100 $1,920 $2,120 $2,520 $2,720 $4,120 $41,440
Total $32,500 $33,700 $34,460 $34,800 $34,920 $34,560 $33,100 $31,920 $32,120 $32,520 $32,720 $34,120 $401,440
Aggregate Planning Tool
This worksheet can be used to go over all production planning before the simulation begins.
Fall Results
Performance Rating
40
60
80
100
120
140
160
1 2 3 4 5 6 7 8 9 10 11 12
Quarter
Team 1
Team 2
Team 3
Team 4
Stand Alone Edition Described
• Nine Computer Teams #2-10– 3 Aggressive– 3 Competitive– 3 Conservative
• Play for up to 12 quarters• Six Different Player Environments• Easy – Intermediate – Hard Options• Reset anytime• Final Results Display
Pricing Options
• Student Editions – Team / Individual– Introductory – $20 / $15– Functional – $25 / $15– Strategy – $40
• Stand Alone Editions– First Scenario -- $20– Additional Scenario -- $10
Assessment (Outcome Statements)
As a result of using this simulation, students should be able to:• Describe a simple business model. • Recognize the effect of basic business decisions on business outcomes. • Analyze Financial Statements and their relationship to the business model. • Formulate a Sales Forecast and a Proforma Income Statement. • Evaluate business decisions in a small manufacturing industry.
Performance Metrics• Perceived Quality • Retained Earnings • Cash Management
Assess Learning
• Successive Testing– Content – Application– Self Evaluation
• Performance Tracking
• Develop Learning Curve