nm5477: we're gonna seek to sort of integrate well pull all together the module basically and also to make evidence of all modules that you've been involved with in essence what we are gonna do as part of a production simulation exercise which is base-, which is software based and based on computers next door which when w-, when it comes to making decisions about how we are gonna run a business we go next door and use the simulation package but in essence what we've really got the tools that you've now become con-, conversant with and for the rest of these seminar sessions you'll be using er in isolation we're gonna seek to use them all together with the end aim of running a business profitably running a manufacturing business as effectively and as profitably as we both ca-, as we all can do as we men-, as Morag mentioned earlier what we are really striving to do is satisfy the four requirements right product right place right time right cost and the tools that we're gonna utilise or we hope to utilise in order to satisfy those four aims and objectives are in are ensconced in the production simulation exercise we are gonna make decisions regarding capacity what capacity we have and how we use it we are gonna make decisions about inventory and in inventory with the things like raw materials sub-assemblies work in progress and finished goods and are we gonna be making decisions with your inventory levels your inventory strategy and how you utilise that inventory and also your delivery performance are you going to satisfy customers all of the time or are you gonna fall victim to the cost trade off and only satisfy the more profitable end of our business so w-, we are really gonna be looking at using those three tools to satisfy the four primary objectives that we talked about in the class okay the simulation background we are gonna be making or you are gonna be making in syndicates of i guess of four we're gonna be making aerials locomotive aerials okay and basically there's the simulation background working in groups of four syndicates of four the you're gonna be running a business it's gonna be your company and you run it as you see fit okay the decisions you make will be your decisions rightly or wrongly the consequences of those decisions the effectiveness of those decisions the results of those decisions will be your business's okay now really in each trading period for this manufacturing business you're gonna be concerned with making four key decisions the quantities to manufacture the volumes to produce in terms of inventory and raw materials what you're gonna buy and when you're gonna buy it your resource allocation how many people you're going to utilise how many shifts you're going to utilise what percentage of the factory you're gonna utilise really your all your four key resources how you're going to allocate them and where you're going to allocate them and the costs involved with doing that and also at later levels when we start to trade to trade prof-, profitably you're gonna have the opportunity to do some money management to invest in to shift money around various accounts all this based on software next door the game will be split into two levels or the simulation will be split in two levels the first level is really to lead you into the game so the decisions you make are not too catastrophic the decisions you make don't have a major major impact on your later effectiveness to run the business we appreciate you're gonna be learning as you're going through the game however later levels increase we're gonna play two levels the first level what you sa-, your decisions what you say you're gonna make you actually make what you say you're gonna purchase you actually receive quite obviously in the real world that is not always the case if you schedule to manufacture one hundred things happen you have scrap rates reject rates test requirements so you have to allow for that sort of an occurrence in your inventory planning in your production planning some later levels increase some general information general information about the business and i guess you've all got the er within the manual you've got or if not we can give you a a broad outline of the various costs et cetera associated with running this business there is some general some general business information you have you have procured each syndicate has purchased a business okay that business cost you three-hundred-eighteen-thousand pounds for the company so you've spent three-hundred-eighteen-thousand pounds to gain this business and in this business you've got the good will the hardware the software the plant the machinery the lease hold et cetera et cetera you've arranged and agreed an overdraft of five-hundred-thousand pounds with with a lender typically a bank quite obviously do not exceed that overdraft except with the permission of myself or Kostas okay I will tell you now if you need to exceed that overdraft you're not running your business well okay the software will actually tell you if you are going overdrawn it will flash red lights at you and tell you that things are not as they should be each of the four syndicates are not directly competing with each other so for argu-, arguments sake if we have syndicates one two three and four the actions of syndicate four do not impact on the actions or the results of syndicate one vice versa they're not linked however that is not to say that we cannot compare and contrast the various results of each syndicate in actual fact we do that so we will compare the the effectiveness and efficiency and if you like the skill of how you run run you-, this business okay but the results are not linked at all okay so you're not directly competing with each other but we can but we can compare contrast and the results of each group each syndicate each company any orders that you miss so for argument's sake if you've failed to satisfy a given customer those orders are gone forever they are not carried over to subsequent weeks following weeks more than that quite obviously if you miss an order to a customer the cost to you is not simply the cost of that missed order so if you've miss an order for one-hundred-thousand pounds for argument's sake the actual cost is not the hundred-thousand that you've missed because there's obviously an add-on and bolt-on opportunity cost of the chances of that customer every calling back to you so in the simulation we actually penalise you for missing an order so every time you miss an order you will see penalty costs occur those penalty costs are twelve percent of the value of the order okay so if you miss an order for one-hundred-thousand pounds you will be penalised twelve-thousand pounds and that cr-, and that money will be taken from your account your trading accounts okay credit on a single transfer is instantaneous basically when you decide to buy something or pay somebody or sell something that transfer is instantaneous as soon as you say yes, i'm gonna purchase it or yes i'm gonna sell it tran-, the transfer is instantaneous material you procure and agree to buy arrives on a Monday morning so it can be used in that week's manufacturing so if you if you buy a previous week to arrive in the coming week you can use it as soon as it arrives it arrives on a Monday and you can use it as of Monday we're not getting involved with things like goods on goods inspection acclimatization or anything like that what you produce that week during that week that week is available for collection for your customers on the Saturday so what you produce that week can be sold that week okay what we are gonna get you to do at the end of the end of th-, the module the end of on Friday afternoon Friday morning stroke afternoon we're going to get you to give a presentation the aims and objectives of that presentation is to give you the opportunity to reflect on what you did well what you did badly what you've learnt from the exercise and really if you were to run the exercise again what would you do differently because in essence that's what learning is all about isn't it so we give a presentation at the end what i want you to do in the short term Kostas is gonna pass around some financial details about the business we ultimately will ask you fill in a decision sheet okay and that decision sheet will contain the following information we are gonna ask you to break into syndicates and call you-, and give yourselves a company name as all companies need to do in order to pr-, protect your financial dealings you need a password i'll as-, i'll ask one if i only ask one thing of you the one thing i will ask is don't forget your password make it a password every member of the group can remember because if we cannot get in we cannot retrieve the information so you need to have a password the team can remember don't forget it the financial transactions don't worry too much about those in the early days you haven't got any money to transfer around you've borrowed money you have a negative overdraft you-, you've got no money to sort of transfer across so tha-, that first part is not an issue to you the first two or three weeks the orders you're gonna place the aerial consists of three constituent parts the aerial assembly the finished product consists of three constituent parts it consists of a main body a central aerial and accessories nuts and bolts and washers et cetera you need to place orders for those you need to de-, describe also to decide what you're gonna produce and when you're gonna produce it days you can produce five-thousand maximum on days so you can assemble five-thousand so if you have five-thousand accessories in stock five-thousand aerials and five-thousand main bodies you legitimately can manufacture five-thousand on days if you want to produce extra or alternatively you wanna work nights only you can manu-, manufacture three five-hundred maximum capacity on nights is three five-hundred evenings we have a capacity of two-hundred-fifty per evening shift and you can work five evening shifts so you can produce a maximum of a thousand two fifty on an evening shift Saturday morning shifts we have a capacity of six-hundred okay when you bought the business you not only bought the good will of the business you actually bought some stock you actually bought some inventory so in stock you have already from starting in week one eleven-thousand units of main bodies thirteen-thousand units of aerials and twelve-thousand units of accessories finished stock you have four-thousand units so that's the working stock you've got so quite obviously if the demand of the first week of your trading is below four-thousand you can satisfy it with your stock no penalties if the demand for the first week of trading happens to be four-thousand-one units you will suffer the penalty of one unit 'cause you haven't got it you haven't manufactured anything what we are gonna do in the short term folks Kostas and i wi-, will between the four groups Kostas and i will be floating around asking answering any questions you may have and i'm sure you'll have one or two questions about the various costs and trade-offs et cetera the first thing i'm gonna ask you to do within the next twenty minutes is i'm gonna split you into your teams i want you to select the team name okay the trading name as i'm fully aware that you tend to sit by your friends and colleagues and like-minded people i'm gonna try and get to to sort of break the ice a little bit as it's the second session of the day so i'm gonna split the teams for you i'm gonna i'll do that quite randomly i'm gonna na-, label you off into teams one to four team one can go to that bench there, team two to that bench team three to that bench and team four to this bench so if you go around the room team one team two team three team four team one team two team three team four you team one two three Alex team four team one team two team three team four okay can i invite you to get into your various syndicates then folks decide what your team's name is gonna be when you've decided on your team name have a bri-, have a brief discussion about your objectives aims and strategy okay er and set yourself a target for team name within ten minutes so you have ten minutes to decide on your team name and then a further tenor fifteen minutes at most to discuss your general strategy okay can i just have your attention for two minutes guys what i'm asking what i'm asking you to des-, er to decide your your organisation er your business objectives and strategy do you all understand the difference between the strategy and objectives su: yeah i do put very very simply the strategy is the strategy is what you want to achieve what you want to do or the objective is what you want to do what you want to achieve the strategy is how you're gonna do it okay and also what measures up what you'll use to monitor your performance how are you gonna measure yourselves against what you want to do how are you gonna measure yourselves against your strategy are you doing it are y-, are you achieving or are you likely to achieve your aims and objectives how are you gonna measure it okay so if you are for argum-, just as a just as an example if your aim if your aim your objectives er or your strategy whatever is to satisfy customers one- hundred percent of the time all of the time how are you gonna measure your performance against that well quite obviously the number of overdue orders is a good measure in this instance penalty costs would be a good measure okay if your aim objectives or strategy is to minimise costs of the product quite obviously monitoring the unit cost on a week by week basis is a good measure of that performance okay so can you all come up with at least one but preferably two aims and objectives and a strategy that you're gonna utilise to achieve those aims and objectives okay in the next ten minutes okay guys the four company names the four companies in competition this week are Air Dynamic Incorporated very very innovative a name [laughter] What You Ask Is What You Get Arial tech and Sagapo and i take that Sagapo means something in Greece Kostas su: yes nm5478: yes [laughter] nothing better nm5477: nothing ss: [laughter] nm5477: okay what we're gonna ask you for now within the next five to ten minutes say what your strategy is what your objectives are and how you're gonna measure those objectives okay we will help you along the way to decide if you have any problems sm5479: what is our mission su: actually er su: yeah that's a good decision su: how su: how su: how can get the efficiency tests on su: su: er su: it's common sense i m-, i mean su: we're gonna see this su: strat-, su: so it's something er nm5477: are you looking to con-, control you're your uti-, res-, your your resource utilisation su: yeah, yeah nm5477: the software will tell you the unit cost of your products which is indicative of the u-, your resource utilisation if the unit cost is sixty seventy eighty pounds the full resources haven't been as used well as if your unit cost is below forty the product sells for forty-five pounds obviously you're looking at a unit cost of ideally below forty so utilisation resource utilisation may be bet-, a a good measure may be unit cost average unit cost sale su: unit average unit cost or unit unit unit su: unit cost su: these subjects because i don't understand it su: su: i find it rather complex su: the cost su: look at the cost of the sm5479: increase market share to increase market share what are we going to do sm5479: customer satisfaction su: increase the market share su: to to to increase don't don't don't su: we are going to increase er we are going to increase er su: not that long now su: because it was a su: so by customer satisfaction su: delivering performance su: delivering performance su: i mean delivering how we are going to measure delivery performance er su: delivery performance sf5488: mm sm5479: see i get hundred orders and they are gonna be seven-, seventy orders have been fulfilled su: su: er delivery performance is seventy su: we get we get order of course we are going to win at least one-hundred sm5479: What we call so the lead performance takes care of the time and time and the quality also time and quality of the materials er sm5481: so you're penalised so if you don't deliver you're penalised if you don't if you don't deliver on time that's a lot a lot harder so how do you measure su: which are delivered from sm5480: one is the lead performance and the other one is the cost of the cost for miss-, missed orders su: sf5488: i i don't think that's a measure because i think that its our responsibility we have to we have to deliver on time we have to del but su: that's not i mean that's not something we can measure because we have to do it sm5479: no you're we have to sm5479: you're doing it but something that should w-, you should monitor see you're doing some work there should be some some kind of monitor which says yes you're going on the right path su: we can keep on producing this when something if a customer is satisfied they want to place more orders a market to er yeah ok yeah yes so er for the second er sm5482: quarterly sm5483: maximise manpower sf5489: resources su: mm su: resources sm5479: all resources is manpower really su: yeah everything su: about resources nm5477: do you have your aims objectives and strategy ready ss: yeah nm5477: super we're all set Kostas nm5478: if you are if your are going to to share with us your strategy objectives and the measurements of success starting with with who's this ss: Aerial Tech nm5478: is this any old thing ss: nm5478: we have two Aerial one is Inc and the other is Tech that's okay so starting from er your objectives what you what your what your targets on this game sm5479: increase customer satisfaction su: capacity nm5478: customer satisfaction su: nm5478: yes su: minimise er minimise production cost nm5478: er su: minimise production cost nm5478: minimise production cost sm5480: okay how are we gonna achieve this sm5482: the first one is to increase customer satisfaction profitably. sf5489: in the first objective nm5478: the first objective is increase satisfaction profitably ss: yeah nm5478: pro-, alright so how do you achieve this through objectives sm5482: The strategy we're going to follow is maximum delivery nm5478: delivery yeah sm5482: second er strategy provide quality goods nm5478: su: provide quality goods nm5477: provide quality goods yeah nm5478: quality goods yeah sm5482: easily delivery date nm5478: delivery su: date nm5478: delivery date okay su: we should we should er offer a refunding orders guarantee in case nm5478: complaints too guarantee complaints too okay er this er you may as well er nm5477: the unit costs are measured there nm5478: okay sm5482: and er increase in sales performance with demand or nm5478: sales performance nm5477: how do you quantify how are you going to quantify making a penalty cost you need to quantify sales performance sales performance is a subjective thing isn't it so how are you gonna quantify it sm5482: the perspective of the also nm5478: okay so you took the monitoring or measuring and maybe penalty costs or overdue orders su: yeah could be su: yeah nm5477: or missed orders sm5482: alright nm5478: other ss: nm5478: you haven't finished sorry su: sm5482: strategies each strategy is going to er nm5478: that's okay it's alright nm5477: that's fine we are just going to put some points here so on the way that you play the game or the method of the game su: okay nm5478: on on on the book on the e play the game on the mid of the e of the game we're gonna see if you change any of these okay you are just gonna have an indication of what was the beginning and what it takes er okay nm5477: you see it's it's there will inevitably be a conflict of interests in it's it's very very difficult almost impossible to have two objectives or two strategies that you say we are going to satisfy customers one-hundred percent of the time all of the time but we are not going to carry an inventory they are not compatible you know yeah so we sh-, all we want all we want to do is to enable you guys to reflect back in a couple of days' time and say put it in perspective and say okay our initial aims and objectives were probably a bit ambitious or we were overlooking and we didn't go back two days in hindsight and if you like contextualise it or put it in context that's useful to you okay nm5478: so er second team sm5479: yeah our objective is to increase profitably nm5478: alright su: and the second objective is to increase market share understanding is that what we are going to borrow is effective inventory management second objective is to effective utilisation of resources nm5478: er management of resources sm5479: yeah su: nm5478: okay sm5479: the third objective is we are su: customer satisfaction sorry start again is customer satisfaction sf5488: nm5478: okay sm5479: and our missions of performance is monitoring inventory and ratio nm5478: inventory su: and ratio nm5478: okay you you gonna receive only a chance er in the course of of inventory every week that you're gonna have so you can measure this in money nm5477: the software will tell you the cost of your inventory so you can monitor that su: and we are monitoring er average unit cost nm5478: okay again the software eve-, even if you don't calculate it the s-, the computer gonna tell you sm5479: okay the third a mission of performance delivery performance by measure of delivery performance if the use-, if we are not meeting the quality at the correct time we are going to be penalised so er that will be the punishment nm5478: alright let's say that er you want to measure this in units of not delivering goods or in money sf5488: money sm5480: in person days nm5478: sorry sm5481: in person days nm5478: okay right let's go to er why sm5484: the first objective is to be a profitable company nm5478: yes sm5484: second objective is satisfy customer needs nm5478: hmm yeah sm5484: yeah sater-, is right quality sm5484: right quality nm5478: yeah sm5484: right delivery nm5478: yeah sm5484: right cost [laughter] nm5478: how about the right time [laughter] is it alright su: delivery nm5478: how about right time sm5484: it's both to arrive or not to arrive nm5478: because delivery can be the right time or the right sm5484: it's both nm5478: alright how do you measure this sm5484: measurements the fastest net profit cash flow and er the cost of penalties for missed orders in in units and money nm5478: in units and money okay alright you are gonna see the er how how many orders you miss and then this translates to penalties to to money in notes okay and the er sm5484: or money [laughter] sf5490: The objectives are increased profit and satisfy the customers with our time deliveries and er the strategy is er the first one is the minimising er inventory because of the cost of the er inventory and er second one is er our preferences to to viewers in because is cheaper nm5478: yeah sf5490: And the third one is increasing er the sale mm the size productions nm5478: alright sf5490: yes all the time all the time i think we er we should check the cash flow nm5478: yes su: and er measure our er quality of inventory costs nm5478: mm su: that's it nm5478: that's it alright very nice so everybody wants to make money this week er okay hopefully all of the teams gonna make money usually one team make-, money two things makes less money and one team [laughter] okay but this is hopeful this is er this is usually hopefully this time all the teams is gonna be on the best case of making money er i want to to give you the attention in some of your objectives and strategy that are not compatible be careful when you say minimise the inventory and satisfy customers minimise inventory is a very nice er target sf5490: dream nm5478: but you have to take which level which level you you minimise your inventory alright if you min-, if you use it a lot then you don't have enough stock to deliver su: on time nm5478: units on time okay and then er about this er producing basis don't take it for granted because for many of you it's not er possible to sat-, to satisfy th-, the-, the units the demands er with only five-thousand units sometimes it is possible sometimes it's not er cash flow cash flow is very important is the most important thing in the company a company can run with losses but cannot run with no cash if you get er in ma-, a lot of times negative in your cash flow and in this case your negative maybe below of the five-thousand pounds that you have in loan then the company belongs to the bank that gave the money and you take holidays [laughter] okay so try t-, to figure out how not to exceed these limits but the the er objectives and the strategy to success on this game are there the right points are there the question is how you're gonna to make this reality on the game and how you're gonna make on the end money profits okay nm5477: okay guys decision making quite obviously you're faced with the decisions that we pointed out earlier you have a green decision sheet in front of you that looks something like that okay as you can see from the decision sheet we're currently trading in week thirteen so you have bought the business at the end of week twelve okay what information you have to help you make the decision well quite obviously we are not a made-to-order organisation we have to build the inventory in the anticipation of selling it so we are a made-to- stock organisation if you haven't got it in stock you cannot sell it okay i'm going to go through all the decisions you need to make and the starting status so okay what information do you have to help you make your first decision what do you have in order to make if you like to make your first your first forecast you have last year's a past issue of last year's demand last year's sales history which is attached a-, as an as an appendices to the to the first page and also you have this year's first twelve weeks demand okay so you have a historic profile of past demand and if you remember when we talked about forecasting and we spoke about forecasting being one of two er particularly er objective or quantif-, quantifiable forecasting we talked about objective forecasting and the extrapolating or casting forward past histories of demand and even be what's called a moving average or aggregating the past demand or following the trend or er er trend analysis both techniques or both systems might be of use it's for you to decide which is most appropriate or if in fact objective forecasting is at all appropriate it may be that you deem that the demand is so sporadic so unpredictable that an intuitive er subjective approach to forecasting may be better it's for you to decide what i will ask of you is in by a quarter to five is that gonna be long enough ss: yeah nm5477: yeah within twenty-five minutes can i ask you to have the first decision made okay the first decision made for four-forty-five with those filled in forget the first two you've got no money to invest you can't you can't do anything with the with the the financial transactions the only decisions here that really concern me you need to decide how many main bodies you're going to order how many aerials er aerials you're going to order how many accessories you're going to order, accessories have a two week lead time aerials and main bodies have got a one week lead time you need to decide what you are gonna produce and when you're gonna produce it maximum five-thousand on days three-thousand-five-hundred at night or having differing costs and that's your opening inventory status so for four-forty-five twenty-five minutes to go can i ask you to fill in the front sheet of the green forms you have the first decision sheet we'll then we'll then take you next door and we'll key in that data into simulation and we'll see how well or otherwise you did in your decision okay go sm5484: we should be able to meet that demand you'll be too late if we start planning in week seventeen for week eighteen when we expect a peak so what i'm saying we need enough build up any but for now so as far as we are concerned probably the demands from right here in this range keeping with this trend [mm] and that's it as far as this week is concerned [mm] probably less slowly we will increase the production rate and probably just three weeks before this peak here we will start planning for this su: you're saying you're saying that we should maintain this just to be su: yeah yeah yeah sm5485: mm nm5477: okay guys are we about ready for decision week thirteen nearly nearly that's how you stand at the moment so if you click here to enter your team name your password not to be forgotten okay we're not playing for a floppy so it just goes straight into the hard drive okay you click on bank there and it just asks you to transfer what you wanna transfer where to and so on to get you er at the moment and then the production schedule er okay what are you gonna produce su: nm5477: okay commit that to the schedule you'll be given an opportunity to check it make sure that's what you want to do okay please check this information is correct su: hmm nm5477: once you're happy with that continue okay now once you click on yes to commit the chan-, the changes and roll the week forward that will immediately roll you forward into into into trading week fourteen scroll that up and down see your results or we can print off or print the results okay you need to do there there's a set of your results okay what your inventory costs were the level of accessories et cetera your inventory status your finished stock records when we get to play level two we'll be getting scrap rates et cetera they'll be in there but if they are not there they are not appropriate sm5487: is this part of the simulation nm5477: it within level two yeah we don't introduce that yet sm5484: we have enough to sell three-thousand sm5485: the idea is to comply with sm5486: sm5484: extra sm5485: yeah so this is three-thousand is gonna come now to we are gonna put it off five-hundred this one that's er okay how many almost six-thousand sm5486: okay sm5484: how much the maximum capacity so what i'm saying is we can only accept an inventory level maintain under a value of ten-thousand sm5485: you're saying you're saying that we should maintain this er same level just just to er meet this week from next week before the stock er build up sm5484: yeah yeah sm5485: yeah you can see that because over here and then we gonna be around that the same level we do week fourteen and seven we are at a low level so that there's no idea for a start and the er build up is gonna be less if you see only for this period because after this peak we alw we are gonna be changed with something like that sm5484: and again sm5486: from two-thousand to t-, eight-thousand pound so you can see the cost sm5485: the cost of one sm5485: yeah yeah sm5486: so can we remedy this situation sm5484: we are gonna have this kind of fluctuation that's only as far as sales is concerned i can only sm5485: very small percentage very small sm5486: but if you don't sm5485: the cost the cost of meeting orders that are higher sm5486: sm5485: i totally agree totally agree sm5484: we have to fill green so first then there are two things we have to do forecast if i estimate that i'm going to sell three-thousand this week then i'll be left with one-thousand then this week my plan should be to manufacture four-thousand okay these two things so sale as three thousand sm5485: let's see how much of it we have because by by week fourteen this main body is gonna be a finished product sm5485: for example by by week eleven-thousand in one week su: no two week sm5484: we need to decide how much we need to sell how much we need to produce consequently how much we already have four-hundred i have a stock of one- thousand if i'm feeling that is not sufficient i can always produce for the sake of stocking see ideally sm5485: yes but er just clarify because i just can't see the point but just can't see where enters your model sm5484: week fourteen so depending on eleven-thousand under a value of one- thousand i'm saying inventory of raw materials sm5485: yeah but the point i'm trying to make is why you sum sm5484: you can actually produce nine-thousand in one week you have the capacity to produce nine-thousand but you don't have the materials what i'm saying is that the cost of inventory yeah so value is forty-five multiplied by some quantity i'll three five-hundred into forty-five it's only seven-hundred- seventy-seven whereas in day shift night it's twenty-one-thousand su: probably sm5484: no problem so er will be con so the end of the day we take nine- thousand the order we don't know we estimating ten-thousand let's see sm5481: so minus sixty-five that's for week fifteen i'd say that's six-thousand exactly so week fifteen su: so this week how much would we be able su: planning to go sm5481: six-thousand-five-hundred that was what i took us roughly sm5479: so how ready sm5487: so i think fifteen-hundred should be buffer stock enough isn't it su: how accurate is the previous forecast nm5477: sorry su: how accurate is the previous forecast nm5477: that's for you to tell me su: if we produce five nm5478: when you want to print you're gonna press this button okay once once once [laughter] sm5479: produce this week another two-thousand can we sell it nm5478: yeah yeah what you produce this week you can sell this week so if you have enough stock of two-thousand and you decide to produce two-thousand and if the demand is six-thousand you have satisfied it sf5490: okay nm5477: click on the order form sf5490: yeah nm5477: and make your decisions on what you're gonna order you have t-, you must put a value in each cell sf5490: okay su: can i tear nm5478: er so if you you say that you gonna produce here say enough the same five-hundred amount do you know how much you say again here that you gonna produce ten-thousand for longer periods not only for one week er su: but we have ten -thousand sm5481: no three-thousand is gonna be the value of that accessories er in week fourteen if we produce if we produce three five-hundred and all of them were sold no if we produce another five-hundred sm5487: we are planning to produce six-thousand-five-hundred no su: yeah sm5479: no we're not planning not planning su: this week's this week's demand is six-thousand su: six-thousand add a five-hundred buffer su: okay then that would be our su: no you're not listen su: necessities after week fourteen will be three thousand if we produce six- thousand-five-hundred yeah sm5481: so if keep that stock of five-hundred so week fifteen yeah we produce two six-hundred yeah got this two five-hundred buffer sm5479: but now but now we're not making a stock of four-thousand sm5481: ah here we are sm5479: no no we have four-hundred but demand six-thousand we are going to lose two thousand pounds yeah su: yeah sm5481: yeah yeah sm5479: yeah su: but i'm just talking about this su: producing something within the next week su: no sm5479: can we produce this week another two-thousand actually nm5477: yeah yeah what you what you produce this week you can sell this week so if you have a buffer stock of two-thousand and decide to produce two-thousand if the demand is six-thousand you have satisfied it sm5479: okay nm5477: but you must have the raw materials to allow you to do that sm5479: yeah yeah okay sm5487: so in that case we are out of we should keep a the we don't have sufficient stock for the next week for the finished stock okay how can we under if we want to meet that it's four-hundred plus two-thousand plus another four- thousand-five-hundred sm5479: okay but even if we go over six-thousand we're left with su: sm5479: we can buy we can buy sm5479: so next week next week it will come so when we are next week it will come so i can order this week what did you say four-thousand safety stock sm5487: no if you want to have it is four-thousand you see this week this week we are predicting six-thousand-five-hundred in demand su: okay sm5487: to make it up another two-thousand-five-hundred this week apart from that su: two thousand-five-hundred not six-thousand-five-hundred sm5479: it's okay when you s-, say six-thousand su: yeah sm5479: so i've got to make two-thousand this week another four-thousand sm5487: four-thousand to make up the er buffer stock su: okay su: so total average is six-thousand su: i know we have one sm5481: what is our total stock of finished goods sf5488: four-thousand-hundred er four-thousand-hundred er four-thousand-hundred su: sm5479: so we ought to pro-, plan it next week we have a closing stock of er how much running stock how much running stock every su: four-hundred su: four-thousand sm5479: okay four-thousand is the closing stock su: we're keeping that at the bottom sm5479: okay then er what is what will be the sm5481: six-thousand-five-hundred su: six-thousand-five-hundred sm5481: it's about six-thousand from last week su: it's so easy sm5479: so it is it is decreased from er sm5481: yeah so it's a round up so you don't know so er su: mm su: sm5481: so just keep a buffer su: su: maximum of maximum of su: so are we producing er sm5487: four-thousand-five-hundred is our demand su: yeah su: so we are producing another four-thousand-five-hundred sm5487: to make up the buffer stock okay sm5479: how much stock we are gonna be sm5487: we are producing what six-thousand-four-hundred six-thousand-four- hundred we are producing su: three five-hundred at the end of this week Yeah sm5487: so by the next two week if you want to produce another four-thousand you need stock up stock up stock up su: yeah sm5487: and then for two weeks su: see su: mm su: yeah yeah sm5481: so if we have four-thousand-one-hundred in stock here sm5479: so what is what we what we week sixteen sm5481: for that year sm5479: for that sixteen week su: so that could be the week er sixteen sf5488: but we have to put together su: yeah yeah count those on su: so we are going with this su: yeah sm5479: because see the the unit cost for these accessories is one pound one pound when you going to su: you can easily manage it not a great amount but we can build that no' we can manage this er the little big demand sm5479: no one thing here su: no su: no sm5481: we have to order those parts in the er f-, sm5487: so the difference sm5481: so we're producing six other thousand this week yeah sm5487: yeah sm5481: so our opening su: for the or closing stock su: okay er su: so what what is predicted one for the next week su: have we got that su: yeah su: i'd say it's about two thousand su: two-thousand two-thousand er sm5479: five-hundred sm5479: two five-hundred two two-hundred two two-hundred because we predicted as two thousand five and a half su: that we can't do [laughter] su: sure we can think about the two-hundred su: sm5481: we keep four-hundred-five-hundred buffer stock in case su: okay sm5487: if its two thousand five yeah then you need how much we need here su: we'd need another four or five hundred su: another four hundred yeah su: su: how much does it cost us for each order sm5481: it costs us fifty quid for each order su: yeah su: sm5487: er another four-hundred plus can we have stock of another four-thousand sm5481: you wanna keep a stock of four-hundred all the time sm5487: yeah