MG/IE 3400 Lab 5: Simulation of Time Wise Supply Chain

C-Term 2003

  1. Objective of the Game

In this lab we are going to move our attention away from the operations in the manufacturing plant to the design and control of the entire Time Wise supply chain. Specifically, the suppliers and customers will be separated from Time Wise and are considered external partners of the company. Their locations will also be moved to the outside areas of Rm 228. The objectives of this lab are fourfold:

(1)We will explore one major issue in supply/purchasing management: how to coordinate with suppliers. Two approaches: multiple sourcing and single sourcing, will be tested, especially their impacts on the entire chain performance in terms of cost and time.

(2)We will get a feeling of the effect of e-commerce on the supply chain. We will allow outside customers to have multiple ways to place orders.

(3)We will examine the basic logistical impacts on the supply chain performance. Note that the distances from the suppliers as well as the customers to the manufacturing plant are lengthened, introducing the effect of travel/transportation into the system.

(4)We will see how to use a two-bin system to manage safety stocks to protect against the uncertainties arising from the suppliers and production floor.

  1. Description of the Supply Chain

The Time Wise supply chain is illustrated in Figure 1 and the detailed descriptions are given below. Note that in this lab we will assume that the assembly line is operated efficiently but we will examine how the plant can respond to customer's needs and suppliers' operations capabilities.

Supply

In this lab a new role called purchaser is created to deal with the external suppliers that provide the clock hands. Two approaches will be used and described as follows.

Approach 1: Multiple Sourcing

The three suppliers provide the clock hands at the same quality level; however, their delivery time and sales price vary, as displayed in the following table:

Supplier # / Delivery Time (in sec) / Sales Price (¢/pair)
1 / 70 / 80 / 90 / 25 / 20 / 15
2 / 60 / 75 / 100 / 20 / 15 / 12
3 / 50 / 85 / 120 / 30 / 18 / 10

The suppliers will sit in the lounge area outside Rm 228, so the delivery time includes the time spent on counting materials and actual delivery. Note that the supplier's actual delivery time and his/her promised delivery time may not match, creating uncertainty for the supply chain.

Whenever the hands are needed, the purchaser announces the request for quote (quantity and color) to all suppliers, and the suppliers then individually indicate the delivery time and sales price by drawing the card from the top of each stack, and then the purchaser selects the best supplier. No communication is allowed among suppliers.

Approach 2: Single Sourcing

The company relies on only one supplier that has established a long-term relationship. This supplier's delivery time is fixed or of little variation and the sales price changes according to the order quantity as follows:

Delivery Time (in sec) / Sales Price (¢/pair)
80 /  10 pairs 20
 20 pairs 15
 30 pairs 10

Internal Supply Chain

The internal supply chain has the following characteristics:

  • All materials are stored in each associated assembly station and are sufficient for the assemblies of the face, back, and clock. The hand assembly station, however, relies on the external supply and is controlled by a two-bin system: 1st bin for replenishment and 2nd bin containing safety stocks to be used when the 1st bin is empty and the order for hands is on delivery.
  • The assembly line follows a single-part flow, meaning that only one clock is produced each time. Quality control is performed and assured at each station.
  • The assembly line is controlled by a make-to-stock policy, that is, the production continues w/o the impact of the demand; however, the production stops when the 1st bin (for replenishment) in the warehouse is full and restarts when that bin is empty. While the 1st bin is empty, orders are replenished using the 2nd bin (containing safety stock).

Delivery to Customers

  • Warehouse managers pick the finished clocks based on customer orders. A trucker delivers them to the customer.
  • There is only one customer to be served by Time Wise. The customer is located in Rm. 216, Washburn Shop, and places the orders in one or more of the following ways: (1) Web, (2) email, and (3) cell phone. Each order includes information on quantity, color of clock and expected receiving time.
  • The customer will keep track of the order cycle time for each order, which is the time between the placement of an order and the receipt of that order.

Performance Measures

In this game, we will focus on the measurement of the entire supply chain performance. In particular, we will measure

Measure / Description
Order Lead Time / From the moment when the customer places the order to the moment when the customer receives the order
Mfg Lead Time / The time between the beginning of 1st assembly to the end of last assembly
Supply Lead Time / From the B/H station sending the signal to production manager to the receipt of the materials at the station
TimeWise Revenue / # of sales x unit clock price ($5/clock for all clocks)


Figure 1: Time Wise Supply Chain

  1. Base Scenario and Player Responsibilities

We will run the following scenario as a basis for future comparison and redesign of the supply chain. You will be encouraged to make recommendations and suggestions for possible improvement.

(1)Customer: order 12 clocks (6 blue + 6 black) and 8 clocks (4 blue + 4 black) every 2 minutes.

(2)The need for ordering clock hands depends on the safety stock level at the back/hand assembly station

(3)Suppliers: each supplier has two sets of cards: one set for delivery time and the other for price. When the purchaser announces the request for quote, each supplier individually (w/o contacting others) draws the cards from the top of the stacks and displays his/her delivery time and price. The purchaser picks the supplier (based on his/her own judgement).

(4)The assembly line is operated by single-part flow and is stopped and restarted by the production manager based on the safety stock level of the warehouse.

(5)Safety stock at warehouse: guess versus theoretical

(6)Safety stock at hand assembly: guess versus theoretical

Player Responsibilities

# / Player / Major Responsibility
1 / Customer / Place orders and keep track the total cycle time of each order
2 / Order taker / Take the orders and then give each order info to warehouse manager
3 / Supplier 1 / Determine the delivery time and sales priced based on each request for quote. If selected, deliver the materials to the purchaser’s receiving area, and the purchaser then delivers to the B/H assembly station
4 / Supplier 2
5 / Supplier 3
6 / Purchaser / Deal with suppliers and choose the best quote each time
7 / Purchasing associate / Work with purchaser and keep track all needed information
8 / Face assembler 1 (blue) / Assemble the face of blue clocks
9 / Face assembler 2 (black) / Assemble the face of black clocks
10 / B/H assembler 1 (blue) / Assemble the hand and back of blue clocks and monitor the inventory level of hands. When the replenishment bin is empty, notify the production manager to order clock hands.
11 / B/H assembler 2 (black) / Assemble the hand and back of black clocks and monitor the inventory level of hands. When the replenishment bin is empty, notify the production manager to order clock hands.
12 / Clock assembler 1 (blue) / Assemble the clock of blue clocks
13 / Clock assembler 2 (black) / Assemble the clock of black clocks
14 / Clock assembler 3 (blue) / Assemble the clock of blue clocks
15 / Clock assembler 4 (black) / Assemble the clock of black clocks
16 / Warehouse manager 1 / (1) Pick the clocks based on the order, coordinate the work with the other manager, and make sure each order is fulfilled. (2) Monitor the inventories of finished goods; when the replenishment bin is empty, notify the production manager to start production.
17 / Warehouse manager 2 / (1) Pick the clocks based on the order, coordinate the work with the other manager, and make sure each order is fulfilled. (2) Monitor the inventories of finished goods; when the replenishment bin is empty, notify the production manager to start production.
18 / Trucker / (1) When each order is complete, deliver the items to the customer. (2) Keep track the sales information, i.e, the revenue
19 / Production Manager / (1) Work together to manage the entire internal supply chain. (2) Determine when and how much to order the clock hands. (3) Determine when to stop and restart the production line. (4) Coordinate the information flow.
20 / Supervisor

1