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Assignment 7: Fresh Connections Simulation – Round 6The following is the analysis of the results of the Fresh Connections Simulation for thecompany Team 8. The analysis will include the businesses current performance based onadjustments made from round five. Using the performance indicators and detailed analysisprovided in the simulation, Team 8 will hopefully be able to make the adjustments necessary toturn the company in the direction towards profitability.Reviewing the feedback, provided by the Fresh Connection, from the changesimplemented at the end of round five, it has been revealed that Team 8 continues to have aproblem with the orange supplier, the company is carrying excess inventory for productcomponents, and the operations is struggling to achieve a balance in both the incoming andoutgoing warehouse. Team 8’s adjustments created a situation of underutilized productioncapacity and have done nothing to rectify the obsolete inventory issue. Modifications are stillrequired to see improvements in ROI.Service levels improved and Team 8 received bonuses this round versus penalties.Looking at Team 8 from a financial point of view it was shown that ROI went from -10.89% to-13.11% for an additional 2.22% loss. There was a $615K decrease in sales revenue. Team 8had a significant shift from penalties to bonuses from round 5 to 6 receiving $388K in bonusesfor a shift of $537K due to the supply chain over performing. Production costs rose by $200K,costs of goods went up resulting in a lower gross margin from the previous round. The overalloperating profits for round 6 were higher than round 5 for a total operation cost of -$560K. Team 8 continues on the path of reviewing the business by the separate functional units(Purchasing, Operations, Sales, and the Supply Chain) and make changes accordingly while1
trying to understand how those changes will affect each functional unit and the overall companyperformance. This round it was agreed to make minimal changes to purchasing and supply chainwhile focusing on the operation and sales as it is believed that the adjustments to be made inproduction and sales will greatly improve the overall performance of Team 8 and finally move inthe direction of making a profit. Any and all changes were discussed and agreed to by themanagement of all functional units. The following sections break down the issues and how theissues were addressed for each Functional Unit.PurchasingThe Receiving Department provided information that the supplier, Miami Oranges’ delivery reliability is still below par and the components for production may become unavailable.