Two engineers formed a company called BV. The purpose of the company is to offer mobile phones designed by the customers themselves through interactive web site. The young entrepreneurs got the concept from the Hong Kong, and now they are planning to introduce the concept in Netherlands.

Because of the innovative idea that BV Company is trying to introduce in the Netherlands’s mobile market, POEN bank, the main financer of the project, is highly concerned in anticipated profits and risks involved. For that reason, it’s required to get an insight about sales, production and stock control of the business.

The idea of the present project is to manage a complete analysis of the sales and the  production of the company through a simulation study that will provide valuable information for making the financial plan that will let the young entrepreneurs gain the confidence of the bank to start their business of custom made mobile in the Netherlands.

 Problem Description
The introduction of customized mobile phones in the Netherlands market has some economic uncertainties. Hence inn order to gain back the support of the financer, it’s required to get an insight on the structure of the business and to forecast the performance of the project.

This innovative business faces in its beginning, the problem of little valuable information that could provide a real insight of how the market will react with this new product supply. For facing this first limitation, we are going to use information from Hong Kong experience and we will adapt it to the Netherlands market features. Also surveys done in the Netherlands will provide extra valuable information that is been required.

The forecast of the sales for the Netherlands, will consider the customers’ possible behavior, the reaction of the market with the offered mobiles types, and also will try to diminish some uncertainties.  For this purpose, it is been required to manage sales forecast with the use of year factor, proportion of weekly sales by day of the week, consider a unaccounted variation between the forecast sales and the real sales, and a maximum number of provided mobiles types are offered per week. This last factor is of significant importance, because the market in where the custom made mobile is introduced is considered smaller than Hong Kong, so it’s possible that cannibalism  of the products would occur, and this probably will limit the ranges of the maximum sales among the different types of mobiles provided by BV. For this reason the different types of tactics should be adopted for the introduction of different mobile phone i.e. which mobile should be introduced when?, which should be introduced first in the market? or what types of mobile should be introduced?, as cannibalism exists.  Having answers to this question would help the firm to have the idea about the turn over.

Also it’s necessary to get an insight in the production line process, in where the mobile components orders and the stock management are the main considerations to be taken into account. Because the company’s main activity is the assembly of mobile products that come from three suppliers, the manage of the stock and the orders to these suppliers are of great concern, because every time an order is done, an order charge is levied by the supplier. On the other side, if the company request to many components, a stock cost appear. As a result, an adequate balance of the mention extreme conditions must be identified that guarantee the good performance of the stock management to keep a check on the inventory cost and ordering costs of the firm.

Also the resources required for the administrative, production and quality control should also be considered. Their efficiency, utilization rate and the cost involved in hiring them, should be optimum so that we can have the optimal level of utilization and cost involved in the wages.

Additionally, the quality is very important for the acceptance of the product on the market. For this reason in the production process a quality control is done. Sometimes the product already assembled will have an insufficient quality, so it will be necessary to assembly again the mobile from the beginning, but the time of response of the order has a deadline period of four working days. Any delay will provide to the customer a discount of 30%, which will affect the profit of the business. For this reason, a simulation of the production process will give a better insight of how the business could behave. This probably will help identify any strategies for improving the performance of the business while the satisfaction of the customer is the main issue.

The Research Questions

1.    What could be the range and pattern for the sale of the mobile phones i.e. which type of mobile to be introduced and when? And also how to increase the companies turn over?

2.    How the inventory should be managed so that cost of stocking and ordering are controlled and there is always sufficient stock present to cope up with the demand?

3.    What could be the optimal utilization rate and number of resources, so that there is maximum efficiency in the company’s performance and minimum cost involved in engaging the resources for the administration, production and quality control?

4.    What could be the optimal strategy anticipating all the three above mentioned problems and making an optimal financial plan?

Approach To The Problem







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