A Team Learning Exercise in Managing Big Supply · PDF fileA Team Learning Exercise in Managing Big Supply Chains Using Very Small Screens 3 provides customer orders to the retail

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A Team Learning Exercise in Managing Big Supply Chains Using Very Small

Screens

Don N. Pope

College of Business Administration, Abilene Christian University

ACU Box 29309, Abilene, Texas 79699-9309

Phone: 325-674-2786 Fax: 325-674-2507

[email protected]

ABSTRACT

This paper presents a web-hosted spreadsheet model of a supply chain which has been used in

the classroom to demonstrate and test the use of mobile hand-held devices in team collaboration.

The model is also structured to support student learning of the time dynamics of supply chain

cost flows as reported in traditional accounting statement formats.

INTRODUCTION

“Business – meet fun. Fun …. business. Rethink possible.” These words are a theme

line from the AT&T Blackberry Torch commercial (2010) in which business people interact with

elements from amusement parks including roller coasters, bumper cars, tea cup rides, etc. The

Torch device combines a touch screen popularized by the iPhone and other smart phones with a

retractable keyboard preferred for many business uses. A similar commercial features a new red

purse design which, after being photographed in use by a celebrity, experiences a surge in

demand to which business users respond by creating production orders using mobile phones.

Using mobile devices for serious business uses beyond email, sending documents, etc.

presumes several things: ease of use of the hand-held device and software applications tailored

for use on such devices, ubiquitous wireless connectivity, and data integration among widely

dispersed users and applications. Web-hosted office applications, including spreadsheets, allow

users to collaborate real time using what is known as “Software as a Service (SaaS), “cloud

computing” or “on-demand computing”. Current literature is replete with discussions about the

possibilities and issues with this computing model. (Levinson, 2007 and Snyder, 2008)

Example web-hosted spreadsheets include Google Documents (Google, 2009) and Zoho Sheet

(Zoho, 2009). Griffiths (2009) reviews several mobile spreadsheet apps developed for iPhones,

describing the strengths and limitations of the apps within the context of a small device with

limited user interface capabilities. Kukulska-Hulme (2007) provides an extensive review of

research concerning the educational usability of mobile devices up until that point in time.

The following sections present an example supply chain management problem, a web-

hosted spreadsheet model for analysis and decision-making, and a team assignment using hand-

held mobile devices.

A Team Learning Exercise in Managing Big Supply Chains Using Very Small Screens 2

EXAMPLE LEARNING EXERCISE

The learning objectives of this supply chain management exercise are:

Students will discover systems dynamics behavior of supply chains and appreciate the

criticality of communication and planning between supply chain levels.

Students will test the impact of operations policy parameters on supply chain financial

performance using standard accounting statements.

Students will experience the convenience and collaborative power, as well as the

limitations of using business applications on small mobile hand-held devices.

Students will experience the power of web-hosted applications for team collaboration

sharing the same file.

The first step in developing an exercise to achieve these learning objectives is to present an

example problem to be solved.

Problem Definition

The problem involves a supply chain having nine levels as shown in Figure 1.

Figure 1. Supply Chain Levels in Exercise.

Level 1Retail A1

Level 2Retail A2

Level 3Retail B1

Level 4Retail B2

Level 5Local

Distributor A

Level 6Local

Distributor B

Level 7National

Distributor

Level 8Factory

Level 9Raw Material

Supplier

Company Administrative

Offices

Cu

sto

me

r D

em

and

The challenge is for individual students operating each level in the supply chain to decide what

order quantity they wish to issue to the next level upstream in the supply chain each week, given

the amount of orders they receive from their adjacent levels downstream. The class instructor

Physical goods flow downstream

Orders for more supply flow upstream


provides customer orders to the retail levels. At the other end of the supply chain, it is assumed

that the raw material supplier is always able to completely fill whatever orders they receive from

the factory. Table 1 defines the unit materials and labor costs, the sales price per unit, and the

weekly manufacturing overhead costs incurred at the factory.

Table 2 provides the following data for each level:

Transport Cost to Order From Upstream - The cost to order and transport more

supply from the next level upstream. In this example problem, these costs increase under

an assumption that the physical locations of the levels of supply tend to be farther apart in

the higher levels of the supply chain – national distribution, factory, and raw materials

supply.

Lead Time Weeks – This is the time in weeks to receive an order at any level n after it is

ordered and shipped from level n+1 upstream. These resupply lead times increase in the

higher levels of the supply chain in this example.

Initial Stock on Hand – This is the inventory on hand at each level that is immediately

available to meet demand in week one.

Customer Wait for Backorder? – This parameter, set either to “Yes” or “No”, indicates

whether this level will retain a stock out as a backorder and consider this demand volume

in determining order quantities to the next supplying level upstream. In this example

problem, the retail customers at levels 1 through 4 are not willing to wait for the retailer

to put the amount of stock out on backorder and provide these amounts in future

deliveries. Thus, a stock out at the retail stores result in lost sales and profit and there is

no need to attempt to meet this backordered demand with orders to the next supplying

level. Other levels in the supply chain retain the amount of a stock out in backorder

status and attempt to satisfy the backordered demand with orders to the next supplying

level in the chain.

Table 3 summarizes the weekly selling & general administrative costs incurred at each retail

store and distribution center and the company administrative offices.

Table 1. Direct Materials and Labor Unit Costs, Sales Price, and Weekly Manufacturing

Overhead Costs.

Overall Parameters

Direct Materials Cost per Unit 20$

Direct Labor Cost per Unit 10$

Sales Price Revenue per unit at Retail 70$

Weekly Fixed Factory Manufacturing Overhead Costs 40,000$


Table 2. Ordering & Transportation Costs, Re-Supply Lead Times, Initial Stock on Hand,

and Backorder Policy for Each Level.

Level Name

Transport

Cost to

Order from

Upstream

Lead Time

Weeks

Initial

Stock on

hand

Customer

Wait for

Backorder?

1 Retail A1 500$ 1 100 No

2 Retail A2 500$ 1 100 No

3 Retail B1 500$ 1 100 No

4 Retail B2 500$ 1 100 No

5 Local Distributor A 750$ 2 200 Yes

6 Local Distributor B 750$ 2 200 Yes

7 National Distributor 1,000$ 2 200 Yes

8 Factory 1,500$ 3 200 Yes

9 Raw Material Supplier -$ 3 0 Yes

Table 3. Weekly Selling & General Administrative Costs for Each Level and Administrative

Offices.

Weekly Selling & General Administrative Costs

Level Name Cost

1 Retail A1 5,000$

2 Retail A2 5,000$

3 Retail B1 5,000$

4 Retail B2 5,000$

5 Local Distributor A 5,000$

6 Local Distributor B 5,000$

7 National Distributor 10,000$

Other Weekly Selling, General Admin 30,000$

All of these parameters are user-defined and can be varied to create different situations.

Spreadsheet Model

The spreadsheet model was implemented in a Google Documents spreadsheet and shared

with students in the class (with order quantities of zero filled in for each week at each level).

Figure 2 shows the data computed and used at each level of the supply chain for decision-making

purposes. The columns of data, for each week, are as follows:

Orders Received from Downstream – Order size received from the next level

downstream. For levels 1 through 4 (retail), the source of this demand is customer

demand from the course instructor. For other levels, the source of this demand is the


“Amount of Order to Upstream” column of the next level downstream, and represents the

decision of the student operating that level.

Orders Filled – This amount is computed to be the smaller of the orders received from

downstream that week and stock available to meet that demand (the stock level on hand

from the prior week plus resupply orders received at the end of the prior week.) This

amount will be the amount actually shipped to the next level downstream, which might

be less than what that level actually ordered.

Stock Level (After Orders Filled) – The inventory level on hand after demand orders

are filled, available to be used to fill orders the following week.

Stock out – The amount of the weekly demand that exceeded the available inventory

(stock level carried over from the previous week plus any shipments that arrived at the

end of the previous week.)

Amount of Stock out on Backorder – The amount of the stock out which will be carried

on backorder and satisfied with future arrivals of supply from upstream. Table 2 shows

the policy codes (“Yes” or “No”) indicating whether this is done or not at this level.

Amount of Order to Upstream – This column contains the weekly decisions of the

student operating this level of the supply chain, given the arrival of the weekly demand

orders received from downstream, stock levels and backorder position, and perceived

trends.

Amount Actually Shipped from Upstream – This is the amount actually shipped from

the next level upstream, given their response to this level’s order, as constrained by their

inventory stock level on hand.

Amount Shipped and Not Yet Received – The amount of the actual shipment from

upstream which is in route but has not yet arrived. This amount is a function of both the

amount shipped and the resupply lead time.

Amount Received (End of Week) – The amount of the order actually shipped from

upstream at the end of the week when it arrives. This amount of stock will be available

the following week to meet new demand orders or backorders.

Cum Ordered and Not Shipped – The cumulative total amount ordered but not yet

shipped from the next level upstream due to lack of inventory on hand.

The data for each level shown in Figure 2 are replicated on separate sheets in the spreadsheet

file and the student operating a given level may, or may not, be allowed to look at data for other

levels, depending on the point at which the instructor wishes to encourage team collaboration

versus isolation.


Figure 2. Excerpt from Data Sheet Used to Manage Each Level in Supply Chain. Supply and Demand

Week

Orders

Received

from

Downstream

Orders

Filled

Stock Level

(After

Orders

Filled) Stockout

Amount of

Stockout

on

Backorder

Amount of

Order to

Upstream

Amount

Actually

Shipped

from

Upstream

Amount

Shipped

and Not

Received

Amount

Received

(End of

Week)

Cum

ordered and

not shipped

200

1 200 200 0 0 0 500 100 100 0 400

2 200 0 0 200 200 500 0 100 0 900

3 0 0 0 0 200 0 0 0 100 900

4 200 100 0 100 300 500 100 100 0 1300

5 200 0 0 200 500 500 0 100 0 1800

6 400 0 0 400 900 1000 0 0 100 2800

7 400 100 0 300 1200 1000 0 0 0 3800

8 400 0 0 400 1600 2000 5800 5800 0 0

9 800 0 0 800 2400 3000 3000 8800 0 0

10 1400 0 0 1400 3800 2500 2500 5500 5800 0

11 2000 5800 0 0 0 3000 3000 5500 3000 0

12 2600 2600 400 0 0 4500 4500 7500 2500 0

Note: Amount of Order to Upstream is the decision to be made for each week by the student managing this level in the supply

chain.)


Use of the Model in a Team Exercise

Three classes consisting of a total of 68 students were grouped into 13 teams of about five

students each. The following ground rules and assumptions were distributed to each team, along

with a brief demonstration of the spreadsheet logic:

1. Your supply chain produces, distributes and retails the popular new device for all your

home chores – vacuuming the floors, mowing the grass, washing the dishes, helping with

the kid’s homework, etc. It is called the Thingatron. It is truly amazing!

2. The manager of each level of your team’s supply chain must decide how many more

Thingatrons to produce or move downstream to the next level. Each week that more

Thingatrons are ordered, a transportation charge is incurred. Production of more

Thingatrons at the factory incurs the direct material and labor costs which occur in the

week that the raw material arrives at the factory.

3. You have great credit but you start the game with zero cash. You will pay interest on

money borrowed to pay for operations in advance of or in excess of cash received from

sales. The rate of interest is equivalent to 20% per year, charged on a weekly basis.

4. The retail stores (levels 1 through 4) do not keep stockouts as backorders. If you run out

of inventory, then you lose the sale. However, for the other levels, stockouts are retained

as future demand in the form of a backorder.

5. At level 9 (Raw Materials), the raw material supplier is assumed to have enough

inventory to fully meet the demand from the factory every week.

6. The lead times are shown in the parameters data. If the lead time to order more supply

from your upstream supplier is 1 week, that means that if you order 100 more

Thingatrons this week, then that much supply (assuming that your upstream supplier has

enough stock on hand) will arrive at the end of the following week, and be available to

meet demand the week after that.

7. If a distribution center does not have enough stock on hand to meet the total demand of

the next levels downstream ordering more items, then the distribution center’s available

stock is split between the 2 downstream locations in proportion to their order quantities.

For example, if in a given week level 1 orders 40 more Thingatrons and level 2 orders 20

more Thingatrons from the local distributor (level 5) and level 5 has only 30 Thingatrons

in stock, then level 5 will ship 20 Thingatrons to level 1 and 10 Thingatrons to level 2.

8. Your team’s performance will be judged by the actual financial performance. 70% of

your score will be from the bottom line income before taxes (from the income statement),

and 30% of your score will be from the inventory turns (from the balance sheet).

The customer demand for levels 1 through 4 (the retail stores) was established as shown

in Figure 3. The teams had the advantage of knowing the entire demand profile over all 30

weeks.


Figure 3. Excerpt of Customer Demand at Retail (Levels 1 through 4). Amount of actual variability around forecast 50%

Actual Customer Demand Forecasted Demand

Week

Demand

Level 1

Demand

Level 2

Demand

Level 3

Demand

Level 4

Demand

Level 1

Demand

Level 2

Demand

Level 3

Demand

Level 4

1 47 30 54 35 40 40 40 40

2 28 31 46 42 35 35 35 35

3 44 24 48 43 40 40 40 40

4 61 67 44 60 45 45 45 45

5 38 35 46 69 60 60 60 60

6 67 98 85 81 80 80 80 80

7 123 100 115 128 120 120 120 120

8 128 200 114 135 180 180 180 180

9 348 193 349 212 250 250 250 250

10 397 397 268 429 350 350 350 350

11 395 440 408 386 500 500 500 500

12 479 855 1191 984 800 800 800 800

13 875 1440 707 1041 1000 1000 1000 1000

14 1429 896 1162 1146 1200 1200 1200 1200

15 1410 1123 1570 700 1400 1400 1400 1400

16 1174 1825 1812 1161 1600 1600 1600 1600

17 2540 2288 2220 2564 1800 1800 1800 1800

18 1387 2799 2243 2542 2000 2000 2000 2000

19 1689 2066 2060 2901 2200 2200 2200 2200

20 3559 1465 1999 2367 2500 2500 2500 2500

21 2576 3800 2505 3222 3000 3000 3000 3000

22 3816 4498 2284 2544 3500 3500 3500 3500

23 3335 7230 7519 5583 6000 6000 6000 6000

24 3093 3086 2751 2482 3200 3200 3200 3200

25 2133 2267 1851 1871 1600 1600 1600 1600

26 726 941 694 1073 800 800 800 800

27 475 241 426 495 400 400 400 400

28 167 213 103 186 200 200 200 200

29 79 121 63 141 100 100 100 100

30 34 65 47 30 50 50 50 50

Figure 4 was provided to the students to illustrate the cost flows associated with physical goods

flow in the supply chain.


Figure 4. Cost Flows Associated With Physical Goods Production and Movement.

Legend:Transport and Ordering Costs

Selling and General Admin Costs

Sales

Level 1Retail A1

Level 2Retail A2

Level 3Retail B1

Level 4Retail B2

Level 5Local

Distributor A

Level 6Local

Distributor B

Level 7National

Distributor

Level 8Factory

Level 9Raw Material

Supplier

Company Administrative

Offices

Cu

sto

me

r D

em

and

B

B

B

B

B

B

B

B

B

C

AA

A

A

A

A

A

AC

C

C

C

Direct Labor Mfg Overhead

Direct Materials

Transportationand Ordering

Costs

Manufacturing Overhead Costs

A

Selling & General Admin Costs

SalesRevenue

RetainedEarnings

Cost of Goods SoldInterestCost

Cash LoansPayable

Finished Goods

Inventory

Customer pays when goods purchased, hence no accounts receivable.

Employees and suppliers paid weekly, hence no wages or accounts payable balances.

Close

Accounts

Borrow

Funds

Pay employees

and suppliersPay back

loans

Recognize weekly interest expense

Mfg Overhead Balance Over or

Under Applied to Inventory and

COGS

A

B

C

C

Mfg Overhead %

Applied to Inventory

10

A budget is developed assuming that all the customer demand shown in Figure 3 can be satisfied.

The budget is developed for two purposes: 1) convince the students that the supply chain can be

profitably operated over the 30 week time horizon, and 2) develop a standard cost for inventory

valuation purposes. The standard cost of $38.56 per unit is comprised of $10 direct labor, $20

direct materials, and $8.56 per unit of manufacturing overhead costs.

Figure 5. Forecasted Income Statement and Standard Costs for Budgeting Purposes,

Assuming All Sales Demand Can be Satisfied.

Forecased 30 week Sales Demand Units 140,200

Revenue 9,814,000$

Cost of Goods Sold (COGS)

Direct Factory Labor 1,402,000$ Unit Labor Cost 10.00$

Direct Materials 2,804,000$ Unit Materials Cost 20.00$

Manufacturing Overhead 1,200,000$ Unit Mfg Overhead 8.56$

Total COGS 5,406,000$ Standard Unit Cost 38.56$

Gross Margin 4,408,000$

Operating Expenses for Transport 180,000$

Selling, General Admin Cost 2,100,000$

Earnings Before Interest, Taxes (EBIT) 2,128,000$

TEAM RESULTS AND FEEDBACK

Figure 6 summarizes the income statements of the top performing teams out of the 13

teams who participated. Per the rules about determining the winner based 70% on the income

before taxes and 30% on the inventory turns, the winner was judged to be team #4, followed by

teams 12 and 6. Note that team 4 followed a strategy of ordering smaller order quantities more

often, which incurred a higher transportation & ordering cost than the other teams, but a lower

interest cost as seen on the income statement and a lower average inventory balance, as

evidenced by the much higher inventory turns than the other teams.

Besides the income statement as shown in Figure 6, the teams also used their balance sheets as

shown in Figure 7. An important objective of the exercise was for students to assess their

performance using standard accounting statements. After 30 weeks, the revenue and expense

accounts are closed and the net balance put into the owner equity account. The cost of goods

sold is scaled by 52/30 to estimate an annual cost of goods sold. The inventory turns are

computed as the annual cost of goods sold divided by the average inventory account balance.

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Figure 6. Summary of Financial Results of the Top Teams.

1 4 5 6 11 12

Units Sold 120,327 127,369 126,424 126,771 127,298 127,369

Revenue $8,422,890 $8,915,830 $8,849,680 $8,873,970 $8,910,860 $8,915,830

Cost of Goods Sold $4,639,713 $4,911,247 $4,874,808 $4,888,188 $4,908,509 $4,911,247

Mfg Overhead Unapplied to Inv & COGS ($100,999) $120,094 $49,541 ($237,946) $68,474 $120,094

Gross Margin $3,884,176 $3,884,489 $3,925,331 $4,223,727 $3,933,877 $3,884,489

Transport & Ordering Expenses $45,500 $112,500 $8,000 $101,000 $98,500 $48,000

Selling, General Admin Cost $2,100,000 $2,100,000 $2,100,000 $2,100,000 $2,100,000 $2,100,000

Earnings Before Interest, Taxes $1,738,676 $1,671,989 $1,817,331 $2,022,727 $1,735,377 $1,736,489

Interest @ 20% on Loans Payable $247,910 $181,910 $314,439 $368,983 $271,653 $208,540

Income before Taxes $1,490,765 $1,490,079 $1,502,891 $1,653,744 $1,463,724 $1,527,949

Income before Taxes as a % of Sales 17.70% 16.71% 16.98% 18.64% 16.43% 17.14%

Inventory Turns 3.15 5.95 2.85 2.10 3.49 4.94

Team

Figure 7. Excerpt from Example Balance Sheet.

Balance SheetAssets Liabilitities

Owners

Equity Revenue and Expenses

Week Cash

Finished

Goods

Inventory Loans Payable

Sales

Revenue

Mfg

Overhead

Unapplied to

Inventory

Ordering

Transport

Expenses

Selling & Gen

Admin

Cost of

Goods Sold Interest

-$ 46,271$ -$ -$

1 -$ 39,870$ 104,380$ 11,620$ 40,000$ 6,000$ 70,000$ 6,401$ -$

2 -$ 34,202$ 210,491$ 21,910$ 80,000$ 12,000$ 140,000$ 12,069$ 401$

3 -$ 28,071$ 316,171$ 33,040$ 120,000$ 18,000$ 210,000$ 18,200$ 1,211$

4 -$ 25,835$ 422,687$ 48,720$ 158,579$ 24,000$ 280,000$ 26,837$ 2,427$

5 -$ 27,608$ 537,653$ 55,790$ 197,321$ 30,000$ 350,000$ 30,732$ 4,053$

6 -$ 27,223$ 648,661$ 67,620$ 235,960$ 36,000$ 420,000$ 37,248$ 6,121$

7 -$ 34,858$ 771,736$ 70,000$ 273,974$ 42,000$ 490,000$ 38,559$ 8,616$

8 -$ 42,107$ 896,344$ 70,000$ 312,365$ 48,000$ 560,000$ 38,559$ 11,584$

9 -$ 48,469$ 1,014,101$ 81,620$ 349,532$ 54,000$ 630,000$ 44,960$ 15,031$

10 -$ 65,126$ 1,145,602$ 84,000$ 385,544$ 60,000$ 700,000$ 46,271$ 18,932$

11 -$ 87,375$ 1,283,318$ 84,000$ 420,605$ 66,000$ 770,000$ 46,271$ 23,338$

12 -$ 129,867$ 1,437,314$ 84,000$ 451,173$ 72,000$ 840,000$ 46,271$ 28,274$

13 -$ 180,958$ 1,591,952$ 95,620$ 478,411$ 78,000$ 910,000$ 52,672$ 33,802$

14 -$ 238,103$ 1,752,655$ 105,910$ 504,468$ 84,000$ 980,000$ 58,340$ 39,925$

15 -$ 367,276$ 1,969,536$ 117,040$ 514,434$ 90,000$ 1,050,000$ 64,471$ 46,666$

16 -$ 514,997$ 2,198,761$ 133,280$ 519,658$ 96,000$ 1,120,000$ 73,417$ 54,241$

17 -$ 686,392$ 2,449,048$ 146,440$ 520,003$ 102,000$ 1,190,000$ 80,666$ 62,698$

18 -$ 858,829$ 2,695,387$ 169,610$ 518,893$ 108,000$ 1,260,000$ 93,429$ 72,117$

19 -$ 1,071,136$ 2,968,294$ 202,230$ 507,777$ 114,000$ 1,330,000$ 111,398$ 82,484$

20 -$ 1,419,518$ 3,343,680$ 242,620$ 465,506$ 120,000$ 1,400,000$ 133,646$ 93,900$

21 -$ 1,722,941$ 3,664,531$ 319,760$ 428,722$ 126,000$ 1,470,000$ 176,138$ 106,761$

22 -$ 2,001,531$ 3,951,735$ 424,130$ 394,120$ 132,000$ 1,540,000$ 233,630$ 120,855$

23 -$ 2,300,789$ 4,250,604$ 538,160$ 353,749$ 138,000$ 1,610,000$ 296,443$ 136,054$

24 -$ 2,632,167$ 4,500,412$ 783,790$ 290,157$ 144,000$ 1,680,000$ 431,747$ 152,402$

25 -$ 2,982,246$ 4,743,572$ 1,068,200$ 217,672$ 150,000$ 1,750,000$ 588,413$ 169,712$

26 -$ 3,762,414$ 5,345,196$ 1,308,580$ 55,101$ 153,750$ 1,820,000$ 720,826$ 187,956$

27 -$ 4,139,330$ 5,703,525$ 1,423,170$ (2,576)$ 153,750$ 1,890,000$ 783,947$ 208,515$

28 -$ 4,426,712$ 6,032,291$ 1,470,000$ (32,094)$ 153,750$ 1,960,000$ 809,743$ 230,451$

29 -$ 4,452,508$ 6,169,402$ 1,498,280$ (1,278)$ 153,750$ 2,030,000$ 825,321$ 253,652$

30 -$ 4,445,722$ 6,290,811$ 1,510,600$ 38,722$ 153,750$ 2,100,000$ 832,108$ 277,381$

After the teams completed their spreadsheets, each student was surveyed regarding lessons

learned about supply chain management and the benefits and difficulties of performing the

exercise using hand-held mobile devices. According to the students, the primary concepts

learned from the exercise were an appreciation for the:

Need for communication and coordination between levels. Getting the right quantity on

hand at a retail store at the right time depends on many other correct decisions at several

other levels in the supply chain.

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Tradeoff between inventory costs versus larger lots to reduce transportation & ordering

costs.

The impact of the long lead times.

A number of variables need to be optimized to achieve overall system financial

performance.

Student comments included the following:

“I knew that SCM was difficult, but the project really put it into perspective. It was way

more confusing than I thought.”

“It was beneficial to experience the complexity of a process every business goes through

daily.”

Concerning the positive aspects of using hand-held mobile devices, the comments focused on the

ability to use anytime, anywhere, without a computer. Concerning the use of web-hosted

spreadsheets, the comments noted the ability to see the impact of group members decisions. The

comments about the negative aspects of using hand-held mobile devices were:

Size of the small screen and the touch screen interface made data entry slow and

awkward.

Small screen made it difficult to see and understand the overall system performance.

Need to refresh screen often to see other team member changes to the file.

Difficulty in navigating around within a worksheet and between worksheets.

Ipod Touch users experienced a lack of wireless access in many locations.

Figure 8 is a photograph of the class during the assignment exercise. The various teams

gathered together talking and using their mobile devices to input their initial ordering decisions.

The size of the assignment required them to complete most of it outside of class, communicating

electronically via the shared file and by means of texts, emails, and voice calls.

Figure 8. Operations Management Class Teams Using the Exercise.

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TOPICS FOR DISCUSSION AND ALTERNATIVE EXERCISES

The exercise provided the opportunity to discuss many inventory management topics and has

many possible directions for expansion of the example problem as presented here. The

following are some of these topics and possible extensions:

Economic order quantity and single-period model theory - Although these concepts

cannot be applied independently at each level of this multi-level problem, the conceptual

tradeoffs between the various costs (cost of having inventory, cost of a stock out, and

costs of ordering more) are still conceptually applicable at the system level and should be

discussed.

Transportation time/cost tradeoffs - As part of the discussion of the results, the students

were asked “Would you have opted for twice the transportation & ordering costs per

week in exchange for half the lead times?”

Study supply/demand policy tradeoffs involving “functional” versus “innovative”

products as defined by Fisher (1997). Innovative products have very high unit profit

margins, but unpredictable demands over short market life cycles. Functional products,

on the other hand, exhibit very low unit profit margins, but higher and more predictable

demand patterns over long product life cycles. In the context of this teaching exercise, an

innovative product would be modeled without a known future customer demand forecast,

a very high unit profit margin and end-of-horizon product obsolescence. Functional

products would be modeled with a known (or fairly accurate) demand forecast and low

unit profit margins. In both cases, the students would choose between fast and expensive

transportation options versus slow and less expensive options, safety stock levels, and

other decisions.

CONCLUSIONS AND FUTURE DIRECTIONS

The exercise was very successful in demonstrating the need for coordination and

communication between levels of supply chains. The students reported mixed feelings about the

use of the mobile hand-held devices. While these devices were observed to facilitate

anytime/anywhere collaboration, the size of the screen and the touch screen interface were

awkward to use for anything other than minor data edits. It is anticipated that tablet devices

might be a viable compromise between hand-held devices and laptop computers. One can also

expect that hand-held devices will continue to evolve in functionality as well as mobile versions

of web-hosted spreadsheet software, both of which will make both educational and actual

business uses easier.

SUGGESTED READINGS

The Beer Game, developed by Jay Forrester and colleagues at MIT (MIT Systems

Dynamics Group, 2009) in the early1960s, is a classic exercise in learning systems dynamics

14

behavior. The inability to communicate with team members or know the retail demand forecast

causes confusion, frustration, and increasing amplification of order quantity size variation back

through the levels upstream. The business causes of this “bullwhip effect” behavior in multi-

level supply chains were more fully studied by Lee et al. (1997). The interaction of multiple

levels of supply chains is the defining frame of reference of the Supply Chain Operations

Reference (SCOR) model (Supply Chain Council, 2009), and the Collaborative Planning,

Forecasting & Replenishment (CPFR) initiative (Voluntary Interindustry Commerce Solutions

Association, 2009). The original Beer Game has been implemented and extended numerous

times online. The Supply Chain Game (Responsive Learning Technologies, 2009) is another

web-based approach to team management of supply chains, given a series of system-generated

customer demands and has more operational parameters to manage than the original Beer Game.

Pope (2010) presents a web-hosted spreadsheet model of a supply chain patterned after the

original Beer Game exercise and discussed its use in a desktop computing lab classroom setting.

Another objective of the proposed supply chain management exercise was for the

students to evaluate their performance using traditional accounting income statements and

balance sheets. Pope and Perkins (2008) and Pope (2009) propose extensions of the traditional

material requirements planning (MRP) process to include associated cost accounting flows

which allows analysis of operations parameters (e.g., lot sizes and lead times) in traditional

accounting statement format.

REFERENCES

AT&T Blackberry Roller Coaster Commercial (2010)

http://www.youtube.com/watch?v=ow7SBaQTjlo, as accessed on 9/30/2010

Fisher, M. (1997). What is the Right Supply Chain for Your Product? Harvard Business Review,

March-April 1997.

Google. (2010). www.google.com as accessed on 9/30/2010.

Griffiths, R. (2009). Review: Spreadsheet editing apps for the iPhone, as accessed at

http://www.macworld.com/appguide/article.html?article=138784 on 9/30/2010.

Kukulska-Hulme, A. (2007) Mobile Usability in Educational Contexts: What Have We Learnt?

In The International Review of Research in Open and Distance Learning, Vol. 8, No. 2, 2007.

Lee, H., Padmanabhan, V. and Whang, S. (1997). The Bullwhip Effect in Supply Chains. MIT

Sloan Management Review (38), 3.

Levinson, M. (2007). CIO May 15, 2007, as accessed at

http://www.cio.com/article/109704/Software_as_a_Service_SaaS_Definition_and_Solutions as

accessed on 9/30/2010.

Pope, D. & Perkins, D. (2008). Integrated Material Requirements/Cost Planning (MRCP).

International Journal of Information and Operations Management Education, 2 (4), 407-433.

http://www.youtube.com/watch?v=ow7SBaQTjlo

http://www.google.com/

http://www.macworld.com/appguide/article.html?article=138784

http://www.cio.com/article/109704/Software_as_a_Service_SaaS_Definition_and_Solutions

15

Pope, D. N. (2009). Operations Management Education and Financial Statements: Connecting

the Dots. Operations Management Education Review, 3:2009, 125-150.

Pope, D. (2010). Collaborative Supply Chain Management Learning Using Web-Hosted

Spreadsheet Models. Southwest Decision Science Institute Conference, Dallas, TX March,

2010.

Snyder, B. (2008) CIO March 5, 2008, as accessed at

http://www.cio.com/article/192701/Cloud_Computing_Tales_from_the_Front on 9/30/2010.

Supply Chain Council (2009)., Supply Chain Operations Reference (SCOR) model,

www.supply-chain.org/ as accessed on 9/30/2010.

Responsive Learning Technologies (2009), The Supply Chain Game, as accessed at

http://sc.responsive.net/sc/sfsu/Assign1/ on 9/30/2010.

Voluntary Interindustry Commerce Solutions Association. (2009). as accessed at

http://www.vics.org/committees/cpfr/ on 9/30/2010.

Zoho (2009) www.zoho.com as accessed on 9/30/2010.

Appendix: Using the Mobile Google Spreadsheets Application.

Users logon to the internet via a mobile version of a web browser (such as Safari), or just select

the Google app as shown in Figure A-1. Logon to Google and select the Docs app. Sign up for a

free user account if needed. Once into Google Docs, select the spreadsheet document which has

been previously created and shared with you as shown in Figure A-2.

Figure A-1. Apps on an Ipod Touch Device.

Safari Web Browser

Google App

http://www.cio.com/article/192701/Cloud_Computing_Tales_from_the_Front

http://www.supply-chain.org/

http://sc.responsive.net/sc/sfsu/Assign1/

http://www.vics.org/committees/cpfr/

http://www.zoho.com/

16

Figure A-2. Listing of Documents in Google Docs.

Once in the spreadsheet as shown in Figure A-3, select any sheet for viewing or editing data.

Once in the desired sheet, select a row for editing. Refresh the screen often to view edits made

by other shared users of this file. Once a row is selected for editing, the screen appears as in

Figure A-4.

Figure A-3. Mobile Google Spreadsheet File.

Figure A-4. A Spreadsheet Row Selected for Editing.

Scroll to the right as needed to see the column with the cell to be edited. Then edit the contents

of the cell as shown in Figure A-5.

Select the desired sheet

Refresh screen often to view

edits made by other shared

users

Select any row to open it for

editing

17

Figure A-5. Entering Data in Spreadsheet Cell.

Then, scroll back to the left and Submit your revised data entry or else Cancel, as shown in

Figure A-6.

Figure A-6. Submission of Edited Data.