Rules

R&D Marketing Production Human Resources Finance TQM Why Products Receive 0 Sales The instructor controls the simulation pace, processing schedule, class events (e.g. Peer Evaluations, Scoring Criteria) and availability of results. Players must download a new starting condition file (Conditions.prn) for each round. Play for each simulated year begins on January 1. Previous year's reports reflect the industry status as of December 31 of last year. Any team member can upload decisions. It's up to each team to assign decision responsibilities. The Web site tracks the decision upload history. When uploading decisions, teams will see a message on Step 4 that reads "You have successfully made changes..." If Teams do not receive this message they have not properly uploaded their decisions. R&D 1. Teams need to carefully verify the coordinates entered in the Size and Performance cells. They should not enter 0 in these cells to terminate a product. Doing so will only create an unmarketable product (to terminate a product, sell all its Capacity on the Production Spreadsheet). Teams should make sure the coordinates entered fall within a segment circle. If they are outside of all segment circles they will not appeal to any customers and consequently will not sell. When teams launch an R&D project they will see the project completion date in the Revision Date column. If an R&D project takes more than one year to complete, the team will not be able to start a follow-on project in the following round. Teams cannot start a new R&D project before the previous one completes (the entry cells for that product will be yellow- teams will be unable to enter new numbers). Also, the new coordinates will not appear in the next Foundation® FastTrack (the product is still at its old coordinates as of December 31 of the previous year). Teams need to check Revision Dates carefully. Starting a second R&D project, or changing (on the Production Spreadsheet) the Automation level for a product in R&D will change the Revision Date. The term Age and Perceived Age are used interchangeably. An existing product has its Age/Perceived Age cut in half on the day it emerges from an R&D repositioning project. For example, if a product with an Age/Perceived Age of 3.6 years is repositioned (revised) today, customers would perceive the Age to be 1.8 years. An R&D project that changes only MTBF (reliability) will not change Age/Perceived Age. Product invention requires four entries: a Size value, a Performance value, an MTBF and a Name. To invent a product, enter a name in an NA cell. Teams need to make sure that the new product name starts with the first letter of team's team name. Important: Teams need to be sure to purchase production Capacity and Automation for a new product one year prior to the product's release. During the R&D period, products continue to be produced at their old specifications (Size, Performance and MTBF). On the Revision Date, the product begins production at the new specifications. Any products in inventory are reworked to match the new specifications. Back to top Marketing Each market segment has its own expectations regarding price range. Under most circumstances, if a team prices a product outside the expected range they will see a reduction in demand for the product. Under any circumstances, if prices are $10.00 above the range, they will get zero sales. Teams should not confuse the Sales Forecast with the Production Schedule. The Sales Forecast is a tool that drives Proforma information. Actual production will be based on information entered on the Production Spreadsheet. To calculate a Sales Forecast, teams need to determine market demand and current production Capacity for all products in every segment. Next, they should judge the product offerings on their relative merits (Positioning, MTBF, Price, Awareness and Accessibility, etc.). From these teams can begin to formulate an estimated Sales Forecast, which is entered for each product in the Sales Forecast cell. Back to top Production Products may only be produced on their own production lines. Teams cannot transfer production Capacity from one product to another. Teams can produce up to 200% of rated Capacity by running a 2nd Shift (or Overtime if the HR module is enabled). Teams cannot produce more than 200% of line's rated Capacity. To get useful Proforma information, teams should match their Production Schedule to the team's Sales Forecast. There is a one year lag between purchase and use of additional production Capacity and Automation. Buy it this year - use it next year. Cash from sale of plant Capacity (by entering a negative number in the Buy /Sell Capacity cell) is immediately available. Entering a smaller number in the Automation cell does not raise cash (team's should watch the Investment row). Entering a new value in Automation incurs a retooling cost, no matter if it is up or down. Important: New products require Capacity and Automation to be purchased a year prior to release. Selling all of a product's Capacity will eliminate (discontinue) the product. Any remaining inventory will be sold to scrappers at 50% of the cost of production. Selling all but one unit of Capacity allows teams to sell inventory at full price. Back to top Human Resources When workers are hired, Recruitment and Training costs are incurred. Workers will be hired when, for example, Capacity is added or Production Schedules are increased. When workers are fired, Separation costs are incurred. Workers will be fired when, for example, Automation levels increase or Production schedules decrease. Foundation®offers an optional Human Resources Module, where teams can determine the number of workers they employ, and set their Recruitment and Training budgets. Back to top Finance To get accurate projections of financial demands, teams should enter all decision data on the other spreadsheets. Brokers charge a 5% fee for issuing Stock and Bonds. Brokers charge a 1.5% fee to buy back Stock and retire Bonds early. The following transactions always occur on the same day (January 1)- paying off debt, issuing Stock, borrowing short term (Current Debt), and borrowing Long Term (Bonds). If teams buy back bonds prior to maturation they pay street value. If teams allow them to mature they pay the face value. Bond ratings are a function of total debt (the more teams owe, the lower the rating and the higher the interest). If teams do not adequately cover their financial needs (either because they failed to raise money or their sales did not go as forecasted) they will take an Emergency Loan. An Emergency Loan is an above-market-rate loan that will cover cash shortfall until the next round, at which time it converts to a short term loan (Current Debt). Back to top TQM Teams should check their Welcome pages to see if TQM rounds are scheduled. Returns for TQM investments follow an "S" shaped curve. If teams spend too little (less than $500,000) returns will be modest. If teams spend too much (more than $2 million) they will push into diminishing returns. Identical investments in successive years will show diminishing and eventually no improvement. Back to top Why Products Receive 0 Sales The product's price was too high or low. The Production Schedule was set to 0. The product was not inside the Rough Cut circle of any segment. The MTBF was too low. If the HR Module is activated, Worker Complement was too low and the products were not produced.