Master Operations Scheduling Game

MOS game has put us in two roles here, as that of a production scheduler and that of a marketer.
The objective of the game was to maximize the net operating contribution. It was required to
make the right decisions on how much to produce in each period, so that it more or less satisfies
the market demand and minimize the inventory and backlogs. Various factors like the sales
forecasts, production shifts, back logs and inventory carrying costs, over-time costs etc. had to be
taken into consideration so that we maximize the net operating contribution. It was required to
create a balance between demand and supply and to bring it as close as possible.
There were three types of advertisement, type 1, type 2 and type 3. Type 1 requiring the least
efforts and also least costs while type 3 being the maximum in both fronts. And the
advertisement or sales promotion with max efforts and costs gets the maximum sales. Also we
could choose the different kind of shifts, single shift without overtime (1S), single shift with
overtime (OS) and double shift (2S) based on the number of units to be produced. Also it can be
seen that overtime is very costly. Also the costs which accompanies for going from one shift to
another and extra costs associated with overtime and second shift also has to be taken into
consideration.
So the requirement was here to choose the right promotion/advertisement strategy plus the right
production shift so that it minimizes the costs involved and maximizes the net operating
contribution. Also it had to be noted that creating a backlog was very much more expensive than
inventory holding cost. Thus it was to be ensured that even if we create some excess inventory,
backlogs should not be made.
Our strategy
Initially, ie. during period 2 we had an initial inventory of -4. The current demand was 68. So we
were required to forecast the sales of period 2. The current demand was a function of the sales in
the current period, the sales of the goods from previous period and the period prior to that and
also the advertising level associated with the respective periods. So the current demand 68 for
period 2 was a function of the sales of good from period 0 and 1. So it was required to forecast
the sales in period 2, so that we can calculate the production quantity for period 2. Similarly, it
was required to calculate the sales for each of the 11 periods so that we could decide the
production quantities for the respective periods.
In selecting the production quantity for the first period, we made a mistake in not considering the
sales for the current period; instead we went with the current demand (which took sales from
previous period and period prior to that) plus the initial inventory. So it led to an increase in back
logs. So in order to counter this we increased the production to the maximum possible level
(110) keeping the advertisement level at zero. But still we had significant back orders due to
larger sales in this period. So we continued with maximum production level, but then there was a
drop in the sales in period 4 which led to an increase in inventory. Then in periods 7 and 11,
there was a hike in sales, and during those periods we didnt have enough inventory and this led
to huge backlogs and this translated into huge costs.
Things we succeeded in
o We were able to correctly decide on the shift and move ahead with double shift
for all the periods but one
o Production level: We kept it at 110 in most of the periods
Things we failed in
o Taking Safety stock into consideration
o Didnt follow any strict strategy in forecasting the sales for any period, rather
went with a number close to the previous period sales and due to this a hike in
sales during few periods increased our backlogs
o We went with chase strategy, while it was preferable to go with a hybrid strategy
ie a mix of level and chase strategy.
Learnings
o Safety stock is a very important factor especially in cases of fluctuating demand.
o Proper advertising level should be chosen and decision should be made judiciously as
advertisements or promotion can translate into an increase in sales
o Number of shifts and overtime should be selected on the basis of cost incurred by the
them and the selection results in minimum cost.
o A proper choice between chase, level or hybrid strategy should be made based on the
demand, so that your production doesnt result in backlogs or huge inventory levels.

Submitted by: Group 8B
Ashish | Ashvini | Mohan | Neetesh | Sharoo