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back (to Introduction)
The simulation Controller issues Management Reports, and teams submit their Decision Sheets in the imaginary instant of time between the end of one quarter and the next.
For clarity, quarters in the past, and in the future, are strictly defined in relation to this imaginary instant of time. All references to them in this manual will be in these terms:
Please note: THERE IS NO SUCH QUARTER AS 'This quarter'.
back (to Introduction)
Free information consists of:
Purchased information consists of
back (to Business Environment: Business Intelligence)
Each quarter the degree of success which your product development has had is shown in the 'Product Data' section of the Management Report, by the words 'MAJOR', 'MINOR', or 'NONE'.
You can 'take up' a Major improvement even if one has not been reported. This has the effect of selling off your existing product stocks, and improves your cash flow slightly. However, there is obviously no marketing advantage, since there is no change to your product.
Each Major product improvement is only reported once. If you do not take it up immediately next quarter, your product development will start a new project and go on to report on how it is progressing. You must remember if you have any unimplemented improvements.
Major improvements which are not taken up immediately do not disappear, but remain until you decide to take them up. If you do not take them up soon, however, your competitors are likely to seize the advantage by bringing similar improvements to the market before you.
It is possible to leave a major improvement for so long that a second one is reported. In this case when you do take one up, you automatically take both with an increased marketing effect.
Taking up a major improvement has no effect on any backlog of unfulfilled orders you may have.
Minor improvements are a by-product of the research on the way to a major improvement, and do not interfere with the progress of that research.
Following the report of a major improvement, your product development team start work on a new project from the next quarter, depending on the level of investment you make.
The process of taking up a Major product improvement is as follows:
back (to Business Environment: Product Development)
Because of the time taken to train, advertise for, and interview workers, recruits do not begin work until the beginning of the quarter after next. The cost of recruitment (Table 15) includes the costs of advertising and interviewing expenses.
Training takes place in the company's own training school at the factory. This limits the numbers that can be trained to nine in each category per quarter. After making the decision to train people, they are brought in from the local unemployed pool at the beginning of next quarter, they are then trained and are ready to start work at the beginning of the quarter after next. The cost of training (see table 15) covers the trainees' wages, materials and training staff.
You can dismiss salespeople and assembly workers. Dismissal implies that notice is given at the beginning of next quarter, and that employees continue to work for the remainder of the quarter before leaving at the end of it. Dismissed employees receive compensation (see Table 15). Dismissals cause unrest, and some employees may seek jobs elsewhere.
The same general causes which influence people to leave for other companies also create discontent among those asembly workers who remain, leading to industrial unrest and strikes in the assembly shop. Official strike notice from the trade union is given in one quarter, determining the length of the strike (in weeks), which then takes place at the beginning of the next quarter regardless of any changes you may make to improve wages and conditions, and involves all your assembly workers. Machinists do not belong to the same trade union and are content to stay at work while benefiting from any wage increases or improvements which have been won by the assembly workers. Salespeople do not strike, but just leave.
When assembly workers take industrial action the total number of hours that can be worked is reduced by 48 hours per person, per strike-week (35 hours basic, plus 7 hours on Saturdays and 6 hours on Sundays).
The available hours of work can also be reduced by absenteeism. In the case of salespeople and machinists this has no apparent effect, but it does affect assembly workers, and hours can be lost in the assembly shop because of genuine sickness, disaffection caused by too much over-time, or poor quality products.
Reducing the number of machines, or the shift level, leads to a surplus of machinists. Because of a trade union agreement, only half of these machinists can be dismissed at the beginning of next quarter. Any surplus still remaining are given labouring jobs around the factory, and paid the same average earnings as those workers who are still manning machines. Half of this surplus is then dismissed at the beginning of the quarter after next, and so on until all have left, or an increase in the number of machines or shift level enables them to go back to productive work again. Machinists who are forced to leave are paid compensation (see Table 15).
back (to Business Environment: Employees)
Assembly workers and machine operators are paid up to a maximum number of hours per person at basic rates of pay, as shown in Table 15. Thereafter the rate is increased for additional hours worked on compulsory overtime on Saturdays which is paid at 50% more than the basic rate, and on Sundays which is paid at 100% more than the basic rate. No decision needs to be taken about overtime working, which is applied automatically at a lower management level. Basic hours are applied first, then Saturday working, then Sunday working up to the limits shown. After that no further work can be done, even though your delivery schedule may call for more products to be made than your labour force can produce.
Assembly workers operate only a single shift, but they can work overtime up to the limit shown in Table 16. They are paid only at the single shift rate. There is no guaranteed minimum number of hours worked for assembly workers, but a trade union agreement requires that the average weekly earnings of skilled employees (based on the number of weeks out of twelve worked) must not be less than that paid to machinists, and any deficiency that occurs is made up by a 'parity payment'.
If you decide to work double or treble shifts, all of your machines are manned fully on all of the shifts, and the rate of pay for all machinists is increased by a shift premium. Machinists are paid at a rate which is set as a fixed proportion of the basic assembly wage rate (see table 17).
Table 16 sets out various factors determining machinists' pay. You pay them a basic rate (which is set at 65% of the assembly wage rate, as agreed with the trade union) for hours worked, but each quarter there is a guaranteed minimum number of hours work per person (see table 17). You continue to pay them when machines are broken down and under repair, but not for maintenance, which is carried out when the factory is not working.
Each quarter, you decide the basic salary for each salesperson, provided that it is above the minimum salary of £2000 (Table 17). Any increase is implemented at the start of next quarter, but you must give one quarter's notice of any decrease, so that it has no effect on pay next quarter, but can affect staff motivation.
You also decide the percentage commission to pay your salesforce, based on the value of orders they generate. The total commission is divided equally between them.
back (to Business Environment: Pay and Conditions)
The Management Report for last quarter shows the maximum authorised overdraft limit available to you next quarter, calculated as shown in Table 19.
All cash transactions, other than dividend payments, are assumed to occur at a steady rate throughout the quarter.
If you paid a dividend at the beginning of last quarter, then your opening cash (or overdraft and unsecured loans) is adjusted to allow for this payment.
Interest due on any overdraft is then calculated (as shown in Table 13) on the average of the revised opening balance and the level of overdraft at the end of next quarter. Your overdraft, if any, includes the interest charged for last quarter.
Unsecured loans are granted to cover funding above your overdraft limit. Interest is calculated in the same way as with overdrafts, and any such loan includes the interest charged for last quarter.
The bank automatically manages your overdraft and unsecured loans, as required, and you don't need to make any decisions about them. Unsecured loans are granted last, but repaid first, as soon as funds become available.
Your bank also places any spare funds on deposit, automatically. Interest earned on deposits is calculated in the same way as with your overdraft. Your cash at bank at the end of last quarter, if any, includes the net interest (earned less paid) for last quarter.
Back to Business Environment: Borrowing (or Profit and Loss: Interest)