BUILDING MICROCOMPUTER BUSINESS SIMULATIONS Developments in Business Simulation & Experiential Exercises, Volume 13, 1986 238 BUILDING MICROCOMPUTER BUSINESS SIMULATIONS Richard D. Teach, Georgia Institute of Technology ABSTRACT The advent of microcomputers has the capability of enhancing the learning experience attained by the use of business simulations. These games, however, can not be simply downloaded from the mainframe versions. the desk top computer is not a small mainframe. It has unique capabilities. Interactive capabilities must be built into these new simulations and the output needs to be directed to ascii files instead of paper in order to utilize the large number of microcomputer software in general use by the business world. With the use of what if’ scenarios, the micro simulations will allow students to make the connection between the theory as taught in the business schools and the practice as occurs in the business world. INTRODUCTION Several versions of sophisticated mainframe business simulations. have either been or are in the process of being converted to microcomputers. Wolfe and reach, 1985] Most of these are mere replicas of their mainframe counterparts. They have managed to combine the worst attributes of both types of hardware and reproduce the mainframe product without enhancing the learning process. These games produce reams of paper output, require lots of awkward floppy disk handling and contain little decision support software Even those that contain or suggest decision support systems do so with very simplified models with predigested instructions, data and models. In addition, most of the supplied decision support systems require rekeying data for analysis. Micros are not fast processors, especially for programs written in interpretative BASIC and the printers associated with micros are painfully slow when printing multiple copies of the pages of output for each team. When a microcomputer business simulation is developed, care must be taken to enhance the learning process by using those features for which micros can be used to their beet advantage. Unlike a terminal attached to a mainframe, microcomputers are able to provide stand alone data analysis. large library of decision analysis programs exist and are in every day use. Spreadsheets, database management systems, word processors and statistical packages abound. While proprietary software packages dominate the market, there exists public domain software which can be used if the level of funding for the more popular software is unavailable. Therefore, business simulation authors should consider the peculiarities of microcomputers as well as the wide variety of software currently available for them when they design new versions of their existing games or when they design entirely new business simulations. It has been this author’s experience that student crave decision support systems. When mainframe simulations were run for a class, students frequently rekeyed the data from the output sheets into SPSS formats in order to do analysis. In a similar manner, as micros became commonplace on campus, the data were keyed into VISICALC and later into LOTUS models. Paper output from these games need to be abandoned, replaced by electronic output in a form readable by spreadsheets and data base management systems. Up to now these students were tacitly shown how to become expensive data entry clerks and by rewarding those students who were super data clerks, the faculty approved their poor allocation of t i me. ELECTRONIC OUTPUT It is amazingly easy to provide electronic output from even current microcomputer simulations. simple ASCII file, with each piece of date on a line by itself can be produced with a simple write statement. Exhibit I is an example from the business simulation Marketing in Action [Ness and Day 1984] and has the following few lines of code to write out part of the income statement: Developments in Business Simulation & Experiential Exercises, Volume 13, 1986 239 This line of code produces the same string of numerical values as produced above with each item being on its own line. This file can then be imported into a LOTUS or other spreadsheet directly using a “.prt” file. If one wished, a spreadsheet template could be supplied for the output, providing the students with an entire set of electronic statements Not only would this make the game output more readily usable by the student Management teams but would make the Programming much easier considering a large part of any simulation is the coding for all the output statements. The only caution is that the format for each statement would need to be fixed. Data such as Marketing research results which may not be requested for every turn of the game would still have to be allocated space. If substantial redesign were to be done, distributed processing could be added and great changes could be made in the learning experiences of the students. A complete redesign of business simulations would allow for reformatting all inputs as well as direct outputs into 80 character by 24 line formats. Full screen editors would facilitate the data input process and simple screen prints would suffice for any hard copy output needed by the team. If each statement was confined to a single screen, the student management team could concentrate on the job of running the simulated company instead f being file and data entry clerks. DEMAND GENERATION AND ALLOCATION The demand equations used in most of the available simulations are not easily charged or altered by an instructor. Take for example, the following demand generation equation for a single product, single market segment game. It is a simple three-variable, nine-parameter model. (Gold and Pray, 1984] An instructor wishing to alter the parameters’ would have difficulty in determining the affects of any changes in the parameters. Care must be taken when establishing elasticity parameters, industry elasticities must be smaller than firm elasticities (Sweezy Kinked Demand Theory for Oligopoly) or that simulation does not perform in a rational manner. Frequently the ability to alter Parameters is not reported in the documentation and one must know how to read the programming code in order to make changes. Caution must be used in making changes because the translation between parameter values and elasticity coefficients is not obvious. Routines are needed to translate desired elasticity values to parameter values. Equations to accomplish this translation are not difficult. It is possible to state the conditions in such a way as to make Alterations and their affects easily understood. Exhibit 3 show possible? screen formats of how parameter changes could be made without undue trial and error. Developments in Business Simulation & Experiential Exercises, Volume 13, 1986 240 The additional influence parameters allow Additional cross elasticities to be incorporated into the simulation. Values from 13, 14 and 15 become parameter values for 9., 94, and 97. This completes all the needed parameter estimations necessary to calculate the? industry demand. The same process using the firm data from above the screen and equations (2) and (3) can be used determine the parameters for the allocation of that demand to each of the firms. COST GENERATION The majority of games provide a fixed cost structure during their course of play, while in reality, costs consistently change at different rates for different items. Students should realize that costs do change over time and that they must tract the results of these changes. In addition they must plan for changes in cost structures of their businesses over time. Cost structures and differential inflation or deflation rates can be generated in a straight forward, question and answer session at the start of each game. Exhibit shows screen prints allowing changes to be made in the cost structure of the firms in the Simulated industry. This allows both flexibility in the description of the industry and changing conditions over time to be incorporated into the game. This process would make it easy for a novice instructor to follow and would add substantially more realism to a simulation. Of course all current costs need to be reported to the student teams each period and some of the these costs could be forecast with error terms for future periods. These two screens could provide controls fu the cost structures. Notice that each component is allowed to have different inflation rates. In the screens above, the cost of labor goes up once a year corresponding to union contracts while materials costs goes up every six months. When mainframes were used in business simulation, parameters were not easily changed, but microcomputers provide a vehicle to alter these values whenever the instructor wishes. Developments in Business Simulation & Experiential Exercises, Volume 13, 1986 241 DISTRIBUTED PROCESSING If distributed processing was built into a Business game, then student teams could Perform simulations within the game simulation. The beauty of this concept is that a team could study what would have happened if their team had made a different set of decisions under the same set of conditions as occurred in any previous period. 4 team could change their decisions and watch what would have happened had they been able to second-guess their competitors, because their competitors would always make their decisions exactly the same. Studying the results under ceteris paribus conditions would expand the learning concepts available to the student management team members and would greatly enhance the learning that takes place in this environment. Students would be able to investigate the shapes of demand curves, check the market’s response to advertising changes an1 to test new products without the noise of competition or changing conditions in the ma place. While this. is not real world and could never be utilized in a working situation, it provides insight into understanding one’s competitive advantage. Using these features, business concepts and principles can be studied in the same fashion as the principles of science and physics. The force of gravity effects both the feather and the cannon ball the same, but one never sees them both fall at the same rate. The Physicist does not teach gravitational concepts by observation under uncontrolled conditions. Sometimes the affect of gravity is demonstrated with the aid of d long vacuum tube in which both a small ball and a feather are dropped at the same moment in time. In a similar manner, business principles can be isolated, the learning experience expanded and the student’s inquisitiveness and curiosity encouraged. The trick is not to produce a simulated industry and have it behave exactly as it would in real life, but to produce a simulated industry with enough face validity to satisfy the participants. Reality is much too complex to be studied in the whole. The best learning processes take place when the conditions are controlled and principles can be explored without too many interactions. Thus, price elasticity curves can be determined under their true definition; the relationship between price and demand at an instant in time. In addition to price, the effect of advertising, sales force and product formulation on demand as well as their interactions with each other could be explored. In a distributed processing simulation, these theoretical concepts can then be compared to what occurs under competitive condition over time. As a result., students can compare theory with practice and better learn how to move from the theory taught in universities to the world of the pr ac t 1 t loner. STUDENT OUTPUTS the start of a microcomputer game with a student team should be able to select a name for their company and from that point on each team can be referred to by that name. All input and outputs should be labeled by the company names and not by a team and an industry number. Thus, a students’ firm which may be known as the Southwest Manufacturing and Sales Company should have all its statements labeled by that name. Given that output is provided in spreadsheet readable files, each team could receives floppy disk with a LOTUS template. This template then can be divided into statement sections such as a Balance Sheet, Income Statement, Cash Flow, Sales Report, Factory Report, Production Report, Marketing Research Information, and Cost Information. Each section would be a detailed report using column for the labels and columns B and beyond for the results of the initial output or starting position. Columns could be labeled using period numbers. At the start both the row and column labels could be shown on the screen using the labels command in the LOTUS spreadsheet. Statements, such as the reports suggested here, may require as many 300 rows or more. This format could then provide each student team with the maximum flexibility in analyzing and displaying their data. They may massage it in any fashion they wished and graph whatever relationships they wanted to view. Getting started using spreadsheets for in initial financial statements is easy. The following example shows its simplicity. Assume each student team has been given a data disk with a spreadsheet templates as described above, on it. Assume a file on the disk handed out to the student team is labeled “Start.prd” which contain the results of the starting period. The students would be instructed to load LOTUS into a computer and place their template disk into drive B:, and load the template. They then would be told to remove the template disk and replace it with the data disk. Nest they would be told to put the cursor it, column B, row 5, (the position for the first data value in the file) and bring up the menus in LOTUS by hitting the “/” and select “File”, “Import”, “Numbers” and to type the file name “Start” when requested. This procedure loads the starting position data from the file beginning at the point of the cursor. At this point in time they would have both the statement labels and the data in the spreadsheet. The teams should be instructed to follow this same procedure each period with the exception that the input file name would change each period. Convention using the name “Per#” where the # symbol is the number of the period being run could be developed. The Only caution is to b9 sure that the starting position of the cursor is in the appropriate column before importing. After each play has been recorded in the spreadsheet, the data disk would be removed and a team storage disk inserted for backup. The spreadsheet may be saved using the / command to bring up the Lotus menus, then have the teams select file followed by save. The student should type the name under which the spreadsheet is to be saved and presto, the team has their Developments in Business Simulation & Experiential Exercises, Volume 13, 1986 242 electronic financial and other statements on disk. If new names are used (suggest using Per# convention) with each new period’s data included in it, the teams have backup copies for every period. In this way the student has both the current results and a running history of each and every iteration of the simulation. Lotus has been used as an example but any spreadsheet program could have been used in its place. The instructions would differ, but the process would remain almost as simple. STUDENT INPUTS Interactive software for recording decisions needs to be designed for use after a team has analyzed their data and are ready to input their decisions for the next period of play. Most of the micro versions now have this feature built in. It seems to be the one major change in the shift from mainframe to micro versions of simulations. An additional feature to reinforce the concept of budgeting could be incorporated in these input routines. If marketing research budgets were either fixed or requested prior to the selection of the options , then students would quickly learn that research is a constrained activity. It has been this authors observation that most students use one or two research strategies, that of buying too much data (more is better) or buying too little (It’s too expensive). Pointing out the difficulties of the first strategy would be assisted by a budgeting process. Building a budgeting process into the input routine could be accomplished as follows. Exhibit 5 is a screen of a hypothetical input routine. Note that a marketing research budget is requested. Only after this value has been entered will a sub-menu appear allowing the selection of specific marketing research information. If the team wished more marketing research information than they originally budgeting for. the program should require that they go back to the decision routine and increase their budget before they were able to request the additional marketing research. While procedures like this were possible using time sharing routines on mainframes, they had to be developed by each instructor and for each resident computer. The standardization of microcomputers makes this interaction available to all users without the need for the instructor to be a computer whiz. OPERATING PRACTICES One of the major drawbacks to business simulations in general, both mainframe and microcomputer versions is the operating practices. Simply because students will be students, decision deadlines are missed. The excuses are endless but missed decision deadlines are d hassle to the instructor. Rules of thumb are used by the instructor to make current decisions for the erring team and fines or other punishments are imposed, but the problems of instructor involvement and time delays remains. Routines can te developed to detect missing or non-current decisions, algorithms can be written to provide decisions that will not cause economic ramifications to the competing teams, the term can be fined and the instructor notified, all without requiring operator intervention. Note that the statement is can, this author of no simulation with this feature. In the same vane, the problem may not be a late or missed decision but the withdrawal of an entire team. The majority of the simulations do not have provisions for the disappearance of a firm. The number of firms or teams is usually fixed at the beginning. Very fundamental artificial intelligence concepts can be incorporated to derive substitute decisions for teams which drop out. The use of industry mean values for price, marketing, A & D, and sales force size works well 1 and does not affect the other teams strategies. Production and materials purchase strategies could be determined on the basis of the game’s parameters and costs. CONCLUSIONS More effective use of business simulations in the classroom can be obtained by the use of microcomputers. This, however, is not automatic. Substantial care must be taken to rewrite the simulation models in order to make use of those features that will enhance the learning process and take advantage of the special features of the microcomputer. Micros are much more than small desk top computers. The way in which one interacts with tie machine and the software is different with this small machine than with a mainframe. The fact that in a very short time period the microcomputer has become a commonplace office work station, one in which business students need to become accustomed. The use of simulations designed to interact with existing graphics, analysis and statistical microcomputer programs can teach not only important business principals, and provide insight to business practices through the u of these business simulations but they also teach students how to effectively utilize microcomputers and currently used software as well. Developments in Business Simulation & Experiential Exercises, Volume 13, 1986 243 ENDNOTES This demand formulation was suggested by Gold and Pray in Simulating Market and Firm Level Demand: A Robust Demand System’ Developments in Business Simulation Experiential Exercises Vol 10, 1983: Lee Graf and David Currie editors pp 101-106. Tom Ness and Ralph Day Marketing in Action 5th Ed Richard D. Irwin, 1904. Joseph Wolfe and Richard Teach Three Downloaded Mainframe Business Games: An Essay Review", paper in preparation. 1985 Table of Contents Volume 13, 1986 How to Use Microcomputers in Human Resource Management Courses What's My Line? An Exercise in Job Analysis, Description and Classification Relationships Between Team Cohesion Dimensions and Business Game Performance Four Factors Affecting Group Performance in Business Policy Simulations Enhancing Strategic Management Goal-Setting Skills in the Business Policy Course Using a Business Simulation in the Principles of Management Course - Learning Outcomes and Perceptions Personal Computers: Drexel's Experience Using Psychological Type to Enhance Negotiation Skills The Effects of Conflict Handling Styles on Negotiation Behavior: An Analysis of an Experiential Exercise An Experiential Test of Bargaining Decisions and Representation Self-Grading of Examination by Students, A Viable Alternative to Traditional Procedures Perceived Instructor Enthusiasm and Student Achievement An Experiential Approach to Teaching Subordinate-Oriented Communication Assessing the Effects of a Computerized Study Guide in Macroeconomic Principles: A Statistical Analysis A Sales Management Simulation for the PC an Integrative Tool for the Sales Management Course Teaching Re-evaluation of Salespersons Through the Use of a Simulation Game A Test of Student Performance and Attitudes and Performance Under Varying Game Conditions Developing and Testing Airways: A Marketing Simulation Experiential Learning Revisited: Some Thoughts on Designing More Adaptive Management Education Programs Developing the Competencies of Creativity and Accurate Self-Assessment Self-View and Norms: Some Longitudinal Laboratory Results Strategic Planning with an Experiential Case The ABSEL Research Consortium: Preliminary Steps and Position Papers An Analysis of ABSEL Conference papers (1974-1985) The Creation and Operation of a Data-base System for ABSEL Research Funding for a Research Consortium on Simulation and Experiential Learning Simulation - Indoctrination or Learning The Dilemma In Evaluating Classroom Innovations Personality Variables on Group Cohesion, Team Participation and Total Learning Justifications for and Problems in Developing and Using Computerized Experiential Activities Management Competency Models and the Life-Long Learning Project: What Role for ABSEL External Validity of Business Games Restructuring the University - An Experiential Exercise The Surrogate Class Exercise Images of Effectiveness: A Classroom Exercise The Algebran Industry: A Tutorial Framework Another Chance: A Multi-Leveled, Macro Business Game for Micro-Computers A Water Quality Management Simulation Game Acquisitions? Divestitures? Progress Report on a Conglomerate Game Enterprise: A Multi-Purpose Management Development Simulation Marketer: A Microcomputer Simulation in a High Tech Industry A Pedagogical Analysis of Alternative Tax Elections for Exploration Costs in the Mining Industry Using of Multiple Microcomputers Application Programs to Teach Fundamental Business Concepts and Practices Demonstrating the Role of Simulation in Strategic Operations Planning: A Case Study in Bank Check Processing Location Analysis The Subjective Side of the Decision Support System: A Pitfall for the Panacea A Group-Based Procedure for Revealing Judgmental Heuristics and Biases An Experiential Exercise in Bayesian Decision-Making Values for Selected Parameters in Physical Distribution Simulation and Games Computerized Business Management Simulations for Tyros The Management Decision Laboratory at New York University An Example: The Use of Management Games on Microcomputers by Computer Novices Enhancing Mainframe Simulation Via Microcomputers: Designing Decision Support Systems Integrating Personal Computers Into a Course as a Decision Support Tool A Decision Support System for Capital Funds Forecasting Performance and Attitudinal Affects of a Decision Support Package in a Business Game Using the Real World: Interviews with Woman Mangers The Cooperatively-Authored Student Handbook International Buying: An Experiential Exercise The Research/Teaching Interface: Turning a Pretest into an Experiential Exercise Building Microcomputer Business Simulations Simulation with Discrete and Continuous Mathematical Modeling An Interpolation Approach to Developing mathematical Functions for Business Simulations The Design of Simulation Models Using Thought Organizers The Assessment Center as a Teaching/Learning Device An Approach to Meeting the AACSB Guidelines for Introducing Skills and Personal Characteristics (SACs) Using an Interclass Simulating and Role-Playing Pedagogy Experiential Learning about the World of Work: A Program for Primary and Secondary School Educators Assessment of Relevant Personal Characteristics of Potential Entrepreneurs