BUS4098 Week 4

Production Decisions

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Business Simulation

©2016 South University

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Production Decisions

Second, there is a need to align the automation choice with the firm's competitive strategy in the marketplace. Automation that works well for a firm may not be of any value to another firm. For example, the high-volume sorting and delivery system that Wal-Mart uses is highly automated, including some of the latest IT breakthroughs that Wal-Mart helped pioneer. This system fits Wal-Mart's strategic focus on driving costs as low as possible, but this would be of little value to a high-end, boutique shop with a low-volume sorting and delivery system.

In the simulation, you will get to work with both the errors. However, you will get an opportunity to work extensively with the second and to a lesser extent with the first. The automation gains that the simulation makes available are potentially the same for all the firms, but results differ depending on what choices the firms make and how well the managers of the companies align their choices with their strategies. This is often the same in different industries where vendors sell the same automation options to rival firms at the same price but with different results on the income statements of different firms. It is often difficult to trace these performance results. However, by performing the what-if analysis, when you are setting out the next three-year plan, you can see how the automation decisions and other operation decisions mentioned here will affect your per-unit cost of production.