SIMULATION REPORTJacob Industries

Team

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500

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2000

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3500

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 1004The 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 = Trucking4. Demand less than 100bbls = Mailing

Where We Got To

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Cash

Cash

Closing Cash Position

On day 1460Jacob Industries Closing Cash balance

$2.95MM

What about those Cost Savings?

Post MortemIssue 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

Questions