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iBizSim01: BM 2 P1
User Manual
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
iBizSim01: BM 2 P1
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
iBizSim01: BM 2 P1
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1 1 5 5 9 9 10 12 12 13 14 14 15 16 17 18 20
Structure and progression of the International Business Simulation iBizSim01 Tasks and organization of the team Company policy Analysis and evaluation of data - setting up the indices The products The markets The development of demand Conditions of payment Image Production Personnel capacity Machine capacity Timetable for purchase, production and sale of products Costs Financing Exchanging currencies Summary of the effect of influencing factors
Decisions
2.1 2.2 2.3 2.4 2.5 Company decisions Sales decisions Purchasing decisions Production decisions Financial decisions
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Annexes
3.1 3.2 3.3 Capacity calculation for period 0 Calculation of manufacturing costs in period 0 Determining the change in stock value in period 0
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2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
iBizSim01: BM 2 P1
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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This course is based on the International Business Simulation iBizSim01 of the series iBizSim: International Business Simulations developed by Prof. Dr. Ashok N. Ullal, Professor emeritus, School of International Business, Reutlingen University, Germany. The course is designed to give groups of students working as teams the opportunity to build and implement an international business strategy for a simulated company operating in the world markets. The simulated company is located in Germany, has a production plant initially in Germany, manufactures initially two consumer products and sells these in four markets, Germany, U.S.A., China and India. The course emphasizes strategic planning and controlling and expects the students to use in a very integrated manner their knowledge and experience from all the other business-related courses. In the International Business Simulation iBizSim01 used in this course, the simulated company that you will manage: Purchases Produces Transports Sells raw materials and bought-in goods - invoices are drawn up in Euro goods in the Germany - all costs arising are in Euro the finished goods to the central store and to the sales branches in the various sales markets the products Alesa and Bordo in four markets in which the invoices are drawn up in various currencies
Currencies used Market Currency Germany Euro (EUR) U.S.A. U.S. Dollar (USD) China Chinese Yuan (CNY) India Indian Rupee (INR)
The balance sheet, the profit and loss account, and the financial account will all be drawn up in Euro.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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period. The owners of your company expect you to out-perform the companies that are in competition with you. It is your task to: 1. Improve the market position of the company 2. Achieve a satisfactory level of profitability 3. Ensure the long-term viability of the company In principle, the internal organization and allocation of responsibilities is left to the teams themselves. However, in the interest of effective decision-making in the given time per period, it has proved to be a good idea to allocate specific functions (for example in sales, finances, production) to individual team members. In the areas of responsibility formed in this way, the group could prepare the decisions of the teams for subsequent discussion. Finally, every team must be able to reach a group decision: this means that agreement must first be reached on how the final decisions are to be made (e.g. by unanimous vote or by majority vote). However, you should nevertheless take into account the following points when distributing the tasks: 1. If participants from the same real-life company find themselves in the same team, there is little point in transferring the familiar hierarchical chain of command to the simulation. If a member of the team, in real life in a high position, tries to push through his/her own view in the simulation in the same way as in the real world, and to deny the other team members any chance of developing, then motivation will die, and a major part of the point of participating in the simulation will be lost. 2. Not infrequently, one still encounters a certain friction between e.g. engineers and personnel in the financial departments, between personnel in production and those in sales etc, based on a lack of knowledge of the tasks and problems that other colleagues have to cope with. It might therefore be appropriate to allocate to the members of the teams tasks that are unfamiliar to them from the point of view of their training or activity in their company. If in the simulation, for example, a production engineer takes over the marketing section, whereas a director of sales is responsible for production, then a certain mutual understanding can be developed which will help to overcome friction in the company, a blinkered approach, as well as any departmental empire-building.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Whatever organization you choose, remember that it is important for every member of the team to be involved as much as possible in reaching the decisions.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Management Tasks
1. Setting the goals of the company Planning of strategic and operational measures 2. Ensuring the availability of the necessary
Staff capacity
Machinecapacity
Capital
Alpha
Beta
4. Absatz der Erzeugnisse product Supply and sales of the auf unterschiedlichen Mrkten in different Markets
Market 1
Market 2
Market 3
Market 4
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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One of your tasks in taking part in the simulation will be to develop your own ideas and objectives and to carry them through against the interests of the competing companies. After your team, as the new management, has become familiar with the company and what is happening on the market, the owners will expect a clear statement of future long-term company policy. Moreover, they will expect the establishment of measures (strategy), the purpose of which is to achieve the stated objectives. The company is not rigidly bound to the policy established at the start of the simulation: however, any deviations from it need to be discussed and justified in the final discussion. The following summary will provide you with examples of business objectives:
In production:
Optimal stockholding, high degree of utilization of capacity, minimization of costs, an even utilization of capacity, minimal staff turnover.
In finance:
Short-term and long-term profit maximization, low level of debt, self-financing, high yield on capital, distribution of high profits.
In marketing:
Optimal satisfaction of customer demand, favorable image, steady growth, high quality, high market share, and constant ability to supply the goods, high turnover.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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1. In which areas of the company do bottlenecks exist? How significant are they? What short-term measures can be taken to optimize utilization, what long-term measures are there to eradicate the bottlenecks? What, therefore, is to be done? 2. Which of the indices appear really fundamental and should thus have particular attention paid to them? 3. Which data should be collected in tabular form over several periods, or extrapolated? 4. Which data are suitable for graphical representation? 5. How is the progression of the curve of the diagrams to be interpreted? 6. What deviations from the planned or expected course of events are discernible? 7. What factors can cause the deviations? 8. How sensitive to these factors is the situation? 9. What effects do price changes have on demand in the markets? 10. What effect does expenditure on communication policy have in the markets? 11. Meaningful information could be supplied by relative figures. They provide relationships in the form of ratios between sets and sub-sets in the same period (e.g. the share of material costs in total costs. The reference of essentially different figures (e.g. difference and/or change in demand in each market). Index figures between essentially similar but chronologically dissimilar figures (e.g. personnel costs in period 1 / personnel costs period 0). As a matter of principle, you are advised to use only the few essential figures as your indices. Particularly in commercial practice, indices cannot be more precise than the base data/figures on which they rest, and the ratio/relationship that exists between them.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Methodology of Decision-Making
Analysis of the past Evaluation of Management Reports over time Current situation Analysis of results of the current Management Report Purchase of market information Type 1 Type 2 Type 3 Forecast of future developments Collection of future-orientated data
Purchasing plan
Sales plan
Development of results plan planned profit and loss account, planned balance
DECISION
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Analysing results
Decision
Assessing alternatives
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Your companys sales range comprises the products Alesa and Bordo, which may be produced within your company or be bought in. The products Alesa and Bordo, offered on all four markets, are durable consumer goods. At the start of the simulation, their selling prices and sales figures are identical for all companies. Alesa and Bordo may be characterized as follows:
They are manufactured partly from the same raw materials, partly from different ones, as follows: Each unit of Alesa requires 3 units Aurit and 1 unit Bekat Each unit of Bordo requires 2 units Bekat and 2 units Calot
They are manufactured on the same groups of machines, but require different production times per unit. Both products may be bought in, as finished goods which - thanks to strict quality control measures - are equal in quality to ones own production. There is no competition between Alesa and Bordo as substitutes. Alesa is a product that has been available in the markets for several years and has developed into a main generator of turnover. The well-tried and tested basic concept, which, when it was originally introduced, was considered a major innovation, has been largely retained. From time to time, attempts have been made, by introducing minor improvements and adaptations, to reflect ever more sophisticated requirements - particularly in the markets Germany and U.S.A. - but this has not prevented the interest of potential customers turning to newer products. Bordo is a mature product that corresponds to state-of-the-art technology. Bordo meets the high demands of the discerning consumer with high spending-power. It has earned high praise from consumer test associations and in technical journals etc. Bordo has been available in the markets for several periods and to date has fulfilled all expectations. So far the markets have been only partially opened up, and that to differing degrees.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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supplying the markets. They fulfill all necessary functions such as processing estimates/offers and orders, after-sales service, customer care, service back-up, storage and dispatch. The transport of products to the various markets causes different costs (see list of parameters). The size of the sales branches in the four markets is determined by the expected demand for Alesa and Bordo: this is fixed by expenditure in one period. The level of expenditure on a sales branch has no effect on the level of demand: it merely affects the capacity to process and deliver customers orders. Please note that in the profit and loss account the costs of maintaining additional stores in the sales branches are not included under the heading Sales branches but are lumped together with the costs of additional stores in the central store under the heading Storage costs for finished goods. The companies attempt to build up long-term business relationships in the markets, a permanent presence on the markets is hence obligatory. The closing down of individual sales branches is not permissible, even when the situation on the market does not allow for costs to be covered on a short-term basis.
1.7.2 Decisions
As at the start of the simulation the products of all the companies are the same, special significance attaches to the companies sales policy decisions. Their aim is to firmly establish the name of the products and of the company in the consciousness of potential customers, to 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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create a competitive advantage for their own products, and last but not least to increase demand and sales at "reasonable" prices. In this, the demand and purchasing decisions of the customers will be determined partly by their experience with the degree to which the different suppliers are able and willing to deliver the right goods at the right time at the right price.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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1. The customers are patient and wait for late delivery at the start of the next period. Non-fulfilled orders are stored and hence increase the orders in hand of the following period. 2. Customers are not prepared to accept delivery delays. They cancel orders in part or in total. 3. The competing companies in proportion to their sales meet the unsatisfied demand. Limited ability to deliver prejudices the image of the company. The damage to the image increases in proportion to the inability to satisfy the demand in that period. It is difficult to win back in subsequent periods those customers who have drifted away as a result of this loss of image.
1.9 Image
The market position of the companies, and thus also buyer behavior, are influenced by, among other things, image. By "image" we mean the sum total of all factors that contribute to the public reputation of a company. Cultivating this reputation can lead to an indirect influencing of customers, and to considerable favorable side-effects on the promotions side. The companies establish standards that - from the point of view of the customers - provide the best performance. By adopting the following measures, companies can encourage the desired favorable attitude of the public: 1. Punctual delivery of goods ordered:
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Punctual delivery is a strong sales argument. It is - rightly - taken for granted by customers. It therefore does not improve the regard in which a company is held. On the other hand, failure to provide punctual delivery damages the companys reputation and worsens its image in proportion to the degree to which demand in the market cannot be met. Damage to image exerts an effect in the following period. 2. Motivation and qualification of personnel involved in marketing: The products are of a high technical standard and hence require explanation and guidance from the sales personnel. This puts the motivation and the qualifications of the sales personnel at a premium. They can be achieved by the training of sales personnel. 3. Continuity of prices: Customers show annoyance with, and lose faith in, companies whose prices are subject to major increases/decreases within one period, or whose prices fluctuate greatly between periods. 4. Improvement of quality: Rising expectations of the customers and the efforts of the competitors require each company to pay increasing attention to quality and to efforts to improve it. At the start of the simulation, all companies enjoy the same image. This factor has the value of 100. It is calculated separately for each market in each period. The image of the companies affects the level of demand for their products: a good image can increase demand; a poor image can result in a major reduction in the demand for the products of a company.
1.10 Production
The production program to be set up based on the means of production comprises the products Alesa and Bordo. These products consist of different raw materials Aurit, Bekat and Calot and are produced in one stage. As far as the financial position permits, it is possible to achieve a balance between demand on the markets and the necessary capacity by: 1. Production for stock 2. Adaptation of working time by introducing overtime (maximum 2 consecutive periods) Introduction/cancellation of a second shift 3. Changing the machine stock by sale or purchase of machines 4. Changing the number of personnel by appointments or dismissals 5. Buying in finished units of Alesa 6. Buying in finished units of Bordo If demand exceeds available supplies of the products, surplus demand occurs with unfavorable consequences for the company. If demand is lower than the supply of products available, 2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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stockpiling is inevitable. While this increases the ability to supply products, it also ties up cash. Company policy permits a reduction of capacity to 50 machines and the appropriate number of personnel, but not the shutdown of production.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Each period covers one quarter with 60 working days. The products Alesa and Bordo make different demands on production capacity. In period 0, the production times are For 1 unit of Alesa For 1 unit of Bordo 45 minutes 20 minutes
These production times may be influenced by lean production and by the continued training of production personnel. The variable production costs (without depreciation) are calculated per machine hour and are given in the parameter list. The useful working life of the machines is fixed in the parameter list. The linear depreciation figures are calculated in each period as costs. The companies reinvest in each period the same amount that is calculated as depreciation. This means that depreciation does not exert an effect on the capacity of the companys production departments.
Period n
Period n + 1
100 % of the raw material delivered in any period can be processed. Depending on the through-put time, a part of the quantity produced in can be delivered on the markets in the same period.
Ordering of raw materials Delivery of materials
Material stocks
Market 1
Production of goods Market 2 Central store Delivery of bought-in goods Ordering of goods to be bought in
Transport to the branch stores in the markets and possibly delivery to customers
Market 3
100 % of the bought-in goods delivered in one period can be made available for delivery to customers in the same period.
Market 4
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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When there are two shifts, the useful working life is reduced because wear and tear then becomes the major cause (otherwise the useful life would remain the same as in single-shift operation). Depreciation is nonetheless calculated as part of the fixed costs.
1.14.5 Stocks
Goods produced within the company are entered with their variable production costs; bought-in products are entered with their purchase price. In the central store, in which at any one time, old stocks, bought-in products, and newly produced products may be stored, a weighted average value is ascertained. A weighted average value is also calculated for stocks in the sales branches.
1.15 Financing
At the start of period 0, all companies possess the same amount of cash: this can be ascertained both in the framework of the liquidity account and in the final balance. The parameters state the minimum amounts of cash at the end of a period, as well as the maximum amount of indebtedness. All decisions taken by company management affect the financial sphere and lead directly or indirectly to cash in-flows and cash out-flows Directly in the same period: lean production, communication policy, etc Directly in the following period: orders of raw materials, machines, etc Indirectly e.g. by decisions in the framework of price policy In addition, income and expenditure inevitably arise by e.g. re-investment of machine depreciation, withdrawal from banks of fixed-term deposits, etc.
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1.15.2 Liquidity
In each period, companies must be in a position to meet their payment obligations, i.e. expenditure in any one period must not exceed the available financial means. Ideally, both amounts should be equal. While over-liquidity does no more than reduce profitability, under-liquidity threatens the very existence of the company. Under-liquidity exists when in any one period the financial means are insufficient to cover the planned expenditure. The maximum debt-equity ratio (credit limit) is given in the list of parameters. Within these limits, you decide on the raising of long-term loans, or their level. In addition, any necessary short-term borrowed capital (within the limits of permissible indebtedness) is raised through overdraft facilities and repaid in the following period. Thus the overdraft credit of the liquidity account corresponds to the short-term obligations shown in the balance. Underliquidity exists when the credit limit for covering capital requirements is insufficient. If a company is insolvent, the instructors running the business simulation reserve the right to Wind up the firm, or Grant a special credit to the firm, but only allow it to continue to participate outside the competition. The following considerations must be taken into account in liquidity planning: Taxes due at the end of every period must be paid Any dividends also occur as expenditure at the end of every period. In every period the basis for the calculation of the debt-equity ratio (credit limit) is capital resources (ordinary share capital plus reserves, as adjusted for dividend payouts). At the end of the year in period 4, the basis for the calculation of the debt-equity ratio is capital resources (ordinary share capital plus reserves, as adjusted for dividend payouts and further adjusted for any accumulated losses).
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At the start of each period, you will be notified of the exchange rates that would be applicable for that period.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Price policy Communication policy Product policy Total Quality Management Image Payment of dividends Training of sales personnel Continuity of sales prices Punctual delivery Lean management Production technology
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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When the management teams have become familiar with the strengths and weaknesses of the companies, they reach the decisions for the next period. The Simulation Leaders will establish and notify you of a specific date and time for the submission of these decisions. It is absolutely essential to abide by this deadline, as otherwise the decisions of period 0 will be used again. The decisions fall into the following categories:
Sales decisions Product policy Price policy - sales price Communication policy - advertising, sales promotion Distribution policy - marketing logistics Training of sales personnel - key accounts Sales branches Transportation Market research
Purchasing decisions Market research Purchase of raw materials Purchase of bought-in goods
Production decisions Planning of production quantities Appointment and dismissal of personnel Purchase or sale of machines Lean production TQM (Total Quality Management) Production technology Continued training of personnel
Financial decisions
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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This figure of 33.33% is calculated as follows: Deliverable part of finished goods = (length of the period total through-put time) / length of the period. Experts feel that, with lean management, the figures could be reduced to throughput time 15 days + + transport and storage time = 8 days = total throughput time 23 days
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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This would enable a corresponding increase in the quantity delivered to the markets in any one period. b) A reduction of the cost of fixed overheads Experts are of the opinion that a 25% reduction of these fixed costs is possible.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Product variations or innovations in order to differentiate products from those offered by the competition. An integral part of product policy is, in addition to decisions regarding the range/assortment of products (to begin with, Alesa and Bordo), the planning of new products. Expenditure on product policy increases demand in proportion to the degree to which it exceeds that of the competition. Experts are of the opinion that in this way demand can be increased by a maximum of 15%.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Attractive design
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Communication policy embraces all the measures a company adopts to inform and to convince potential clients in the market of the characteristics of the products - such as technical fields of application, economy, design, etc. They draw attention to the products of a company and serve to distinguish the products from others on the market, and to create preferences. Advertising and sales promotion directly affect the number of orders received by a company - the sum total of all expenditure of all companies influences the overall total demand. The level of expenditure on it determines the quality of communication policy. Expenditure is established separately for each product and for each market. The effect of communication policy is immediate and there is a fading in the following periods. It is therefore spread over the current and subsequent periods (carry-on effect), although the effect steadily declines. The greatest effect arises in the period in which expenditure occurs. The parameter list indicates the degree of loss of effect. Experience so far indicates that an increase of expenditure over and above 8% of the turnover will not lead to any notable further increase.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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of all products transported to this market - result in discounts (see list of parameters). The discounts are included in the accounts of the same period.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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By acquiring market research reports, the companies can gain information on any trends in good enough time to include such changes in their decisions. Without market research, the companies will only be informed of changes once they have already taken place.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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and induction of a corresponding number of new workers. Shift work and overtime working are not permitted at the same time. The introduction of the second shift requires one period of preparation, hence it cannot begin until the period after the one in which the decision to introduce it has been taken. Double-shift production immediately increases: Production wages by the extra payment for shift work, The fixed costs of the section and the company, The depreciation per period, as the useful working life is shortened. Cancellation shift work takes effect immediately. However, the increased fixed costs remain for the whole period as a result of residual costs.
2.4.2
Appointments are possible at the commencement of each period. Newly appointed personnel undergo induction/training in the first three months (= 1 period) of their employment, receiving full pay while they do so, but during this time they do not contribute to output. The appointment of a new employee requires a fixed sum (see parameter list) for such expenses as job advertisement, interview, and similar. It is also possible for employees to hand in their notice, or be given their notice, in each period. Dismissals take effect one period after notice has been given. Employees who have been given notice of dismissal remain fully available to the companies during the period of notice. They are dismissed at the start of the next period, i.e. they can no longer be actually employed in the period when their dismissal becomes effective. For social reasons, they receive severance pay on leaving the company (see list of parameters). Companies that frequently dismiss personnel must take into account that, as a result of the resultant poor reputation of the company, job advertisements in future periods will not attract sufficient applicants.
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It is doubtful whether expenditure in this direction of more than 4,000 Euro per person/period is sensible.
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companies at the fixed rate of period n. Currency transactions of this nature give the companies a certain protection against exchange rate risk, but the commission, brokerage etc involved cost some 0.5% of the amount receivable. In this, it is assumed that the payment will be made in accordance with the provisions of the sales contract, i.e. on the agreed date. II.If no forward buying transaction is conducted, receipts of foreign currency paid by customers in the period n+1 will be converted at the then valid spot rate. The spot rate of the period n+1 can, and as a rule will, deviate from both the spot rate of period n as well as the forward rate of period n+1. Depending on whether the spot rate of period n+1 is higher or lower, exchange rate losses or profits will accrue to the companies.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Please note that these sample calculations are given to you only to show you the method of calculation and may not represent the actual values of any period.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Capacity required Production quantity Alesa Bordo Production time Alesa Bordo 96,000 units 36,000 units 45 minutes / unit 20 minutes / unit
Capacity required
Alesa Bordo
Capacity surplus/deficit available Machines Workers 175 350 required surplus/deficit 175 350 0 machines 0 workers
The wages of workers who are receiving training, or cannot be productively employed due to poor utilization of capacity are included in the fixed costs.
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Machines required Fully trained workers required Production wage Total production wages Effective production wage
175 machines 350 workers 16.00 EUR / hour 2,688,000.00 EUR 32.00 EUR / hour
Alesa 3 1
Cost 12.00 EUR / unit 24.00 EUR / unit 25.00 EUR / unit
Cost of raw materials Aurit Bekat Calot Total cost of raw materials
Bordo 0.00 EUR / unit 48.00 EUR / unit 50.00 EUR / unit 98.00 EUR / unit
Production costs Production wages Raw material Other variable production costs Production costs before rejects Rejection rate Production costs after rejects
Bordo 10.67 EUR / unit 98.00 EUR / unit 13.33 EUR / unit 122.00 EUR / unit 10.00% 135.56 EUR / unit
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Stock changes occur if within a period the value of the product quantities either produced or bought in does not correspond to the value of the product quantities sold. This is the normal case. In this, there are the following possibilities: Stock increases, i.e. the value of the product quantities produced or bought in exceeds the value of the quantities sold. Stock increases are considered as proceeds. Stock decreases, i.e. the value of the product quantities produced or bought in is lower than the value of the goods sold. Stock decreases are counted as expenditure. As far as products actually produced by the company are concerned, only the variable production costs are included. The fixed costs as well as all sales costs are calculated as expenditure in the period in which they arise. At the beginning of period 0 the value of the finished goods in the central store and in the branch stores is: Alesa Bordo EUR 120.00 per unit EUR 134.00 per unit
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Bordo
Quantity units
Initial stock Delivery from production Delivery of bought-in goods Total stock Stock value / unit Transferred to branch stores Final stock Change in stock
26,000 32,400
7,876,144.00
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Alesa
Initial stock Delivery by transfer from central store Total stock Stock value / unit Decrease by sales Final stock Change in stock
Bordo
Quantity units
Initial stock Delivery by transfer from central store Total stock Stock value / unit Decrease by sales Final stock Change in stock
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Alesa
Initial stock Delivery by transfer from central store Total stock Stock value / unit Decrease by sales Final stock Change in stock
Bordo
Quantity units
Initial stock Delivery by transfer from central store Total stock Stock value / unit Decrease by sales Final stock Change in stock
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Alesa
Initial stock Delivery by transfer from central store Total stock Stock value / unit Decrease by sales Final stock Change in stock
Bordo
Quantity units
Initial stock Delivery by transfer from central store Total stock Stock value / unit Decrease by sales Final stock Change in stock
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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Alesa
Initial stock Delivery by transfer from central store Total stock Stock value / unit Decrease by sales Final stock Change in stock
Bordo
Quantity units
Initial stock Delivery by transfer from central store Total stock Stock value / unit Decrease by sales Final stock Change in stock
2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany
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2005-2009 by Prof. Dr. Ashok N. Ullal, Hoelderlinstrasse 13, 72127 Kusterdingen, Germany