NINE TOPIC ORIENTED MINI SIMULATIONS: DESCRIPTIONS, PURPOSES, AND OBSERVATIONS Developments in Business Simulation & Experiential Exercises, Volume 9, 1982 28 NINE TOPIC ORIENTED MINI SIMULATIONS: DESCRIPTIONS, PURPOSES, AND OBSERVATIONS Terry Dennis, Rochester Institute of Technology Tom Pray, Rochester Institute of Technology ABSTRACT The authors have developed and used extensively a variety of computer based mini simulations as pedagogical tools in the teaching of topics within the functional areas of business. Specifically, the simulations are used in courses such as principles of management, personnel, production and operations management, manpower, statistics, forecasting and managerial economics. These topical simulations were developed to assist both undergraduate and graduate business students in understanding concepts, issues, and problems such as: (i) the inherent tradeoff in the classical E.O.Q. problem, (ii) robustness of inventory models when demand and leadtime are stochastic; (iii) non intuitiveness of queuing formulas; (iv) hiring, firing and training cost tradeoffs in the personnel area; (v) manpower planning via Markov analysis; (vi) optimal recruiting-selection strategy for minimizing total cost of recruiting, selecting, training, etc. (vii) use of simulated data to demonstrate modeling with regression analysis; (viii) and data for empirical demand and production analysis. This paper describes nine simulations which have been extensively employed by the authors. The purposes, underpinnings, and worked examples of each simulation are discussed. Some of the major benefits to both the student participants and the Instructor are highlighted. INTRODUCTION This paper describes nine simulations which the authors have developed and used in a variety of business courses. The simulations are all short, computer based and interactive. They were developed to be used primarily as pedagogical tools in the teaching of management decision making. The following topics are included in the simulations: inventory control, production scheduling, forecasting and demand analysis, recruitment and selection, queuing, and statistical data analysis. The simulations have yielded benefits to both the instructor and students. Some of the student benefits include: (i) easy familiarization with the computer; (ii) an appreciation for trade off analysis in management decision making; (iii) importance of model building and scientific method, and (iv) awareness of the important role of simulation in situations with stochastic processes. Benefits accruing to the instructor include: (1) ability to easily generate individualized data sets; (ii) permits covering of sophisticated management decision making concepts with a minimum of class time; (iii) provides practical examples and applications of theoretical concepts and (iv) with a prior knowledge of the underlying function, ease in evaluation of the exercises. DETERMINISTIC INVENTORY CONTROL This simulation of the deterministic inventory model is used in undergraduate operations management classes to introduce students to the EOQ model. Students are given demand and cost data and are required to make weekly decisions on whether or not to place an order and the quantity to be ordered. Their goal is to minimize total costs without stocking out. Once the students become familiar with the simulation, they may specify a fixed reorder point and a fixed order quantity. They are then provided with cost summaries for each decision set. Developments in Business Simulation & Experiential Exercises, Volume 9, 1982 29 By plotting the costs versus the order quantities, students may approximate the total inventory cost curve for this problem. After six trials the students are introduced to the EOQ model and encouraged to use the model to test its effectiveness. Some of the benefits of this simulation include: • The introduction of students to computer simulations • Students learn to graphically represent the cost functions • Students learn trial and error decision methods are time consuming • The effectiveness of the deterministic model is demons t rated • Students can easily see the advantage of standard operating procedures, e.g. fixed order point • Independent data may be generated for each student or each problem STOCHASTIC INVENTORY CONTROL This Monte Carlo simulation is an extension of the deterministic model. The students are confronted with a stochastic inventory problem and must make weekly decisions on how much and how often they should occur. Cost information is given, as well as, detailed information about the nature of the demand probability function. As quoted in Figure II, stockouts may occur in this simulation, but they will all be backordered. Leadtime may be fixed or variable. This particular option is up to the instructor or to the student. The simulation generates demand and maintains a perpetual inventory system. The students merely hit the carriage return or place an order of some desired quantity. Typically the simulation is played for 100 periods at which time a summary of order, stockout, and holding cost is presented. Figure III notes a typical cost for 100 periods. The simulation has been utilized in a variety of business courses, including freshman level introduction to business, junior level management principles course and in a senior level capstone course for quantitative analysis majors. Interestingly, most students are not familiar with the classical E.O.Q. formulation utilize decision rules based on intuition whereby the stockouts are minimized. After covering the inventory models and noting the inherent tradeoff in the inventory modeling process, the students replay the simulation, and in most cases, reduce their total cost by factors ranging from 20 to 50 percent. Some of the noted benefits of this simulation include: •Students are introduced to a Monte Carlo simulation •The tradeoff in inventory control becomes apparent after comparing team results •To a certain extent there is a pre and post measure of learning (i.e.--changes in total inventory cost). •Illustration of the robustness of deterministic inventory models when applied to stochastic environment •The seed number for the random link may be fixed so as to ensure equity in terms of demand, and leadtime. •Leadtime may be fixed or variable. This allows the instructor to utilize the game at low level or at a more sophisticated modeling level. SCHEDULING The simulation ‘Scheduling” is used in operations management course to introduce students to Monte Carlo simulations and their uses. The students are given a repair facility scheduling problem with three unique service areas. Incoming repairs randomly enter the system in any of the three areas and are either completed there or are routed to another service area. Entry and routing probabilities are given, as are the service time distributions for each area. Students attempt to assess how long it will take to complete all repairs, given a finite number of customers. Later variations limit resources in each service area and require students to allocate those resources among the areas in an attempt to decrease average customer (repair) time in the facility. The observed benefits of this simulation include: •A unique problem result (solution) for each student •Students see the benefits of Monte Carlo simulations Developments in Business Simulation & Experiential Exercises, Volume 9, 1982 30 •Students develop a better understanding of truly stochastic processes and the difficulties associated with planning and scheduling for random events •Gantt charting can be easily coupled with this simulation to help students with the allocation of resources •Comparing individual results in class gives students a better feel for the statistical distributions and ranges of possible outcomes In the second or intermediate course in statistics, the simulation “FIT” is employed. The fundamental purpose of this exercise is to give each student a unique set of data. It is then the student’s task to develop a model that adequately describes the data over the factor space. The program keys on the social security number and generates twenty-five paired observations for dependent variable Y and independent variable X. Three different sets are illustrated below: To ensure differences in data, “noise” is introduced via a rectangular probability function. The program has five different functional equations which generate the data. The students are then asked through ‘good” statistical procedures to develop a model which explains the twenty observations. The exercise includes a written report where the students report on: underlying assumptions of the regression model; possible violations of those assumptions; goodness of fit measures; level of significance, etc. The “noise” is kept limited so that misspecified models may appear to be significant statistically, when in fact residual analysis depicts assumption problems of misspecification. Figure VII notes the summary statistics for a bivariate linear model while the residuals indicate problem areas. Some of the observed benefits from the regression case include: • Different data sets for each student or groups of students • Ease in grading because the “true’ functional forms are known to the instructor. • Instructor can increase the random component and still have a significant model • Encourages the student to model in a logical statistical model • Feedback to student as to the “true” model QUEUING “Queuing” is used in upper division undergraduate and MBA level operations courses as an introduction to common queuing formulas. The simulation generates random arrivals and service times in a one clerk store where average arrival and service times are known. The Developments in Business Simulation & Experiential Exercises, Volume 9, 1982 31 output shows the number of arrivals, the time of the arrivals (minutes) , the length of service, and the actual service times (cumulative minutes) in twelve minute segments over a four hour period. The benefits of this simulation are: •The simulation helps overcome the tendency on the part of many students to “intuitively reason” that a line should not form wherever average service time is less than average time between arrivals. This “intuitive reasoning”, if not dispelled, frequently causes students to distrust the answers they obtain using queuing formulas. •The display allows students to see a queue forming in the facility •Summaries allow students to compare actual arrival and service times with the expected times •The simulation may be easily altered to change the queue length EMPIRICAL DEMAND ESTIMATION In junior and senior level managerial economics courses, one commonly covered topic is empirical estimation of demand. A simulation was developed which minimizes statistical complications such as multicollinearity, autocorrelation, and identification problems. This exercise gives each student a unique set of data from an apriori specified demand function. The students are given twenty- five observations on the following variables: period (time), quantity sold, price, substitution index, disposible income, advertising expenditures, unemployment data and a contrived taste index. An example is presented in Figure IX. The students are expected to thoroughly analyze the data and include both marketing and business policy implications, as well as the statistical significance of their model and various variables, in their report. The instructor has control over the variables via the elasticities. The functional form employed is a multiplicative demand function: Three Different Models that have been commonly used are presented in Figure X. Some of the benefit derived from this empirical demand exercise include: .Different exercises for each student or groups of students •Minimizes student frustration by ensuring proper signs of coefficients and statistical significance •Ease in grading--the functional forms are known to the instruct or •Blends both economic theory and statistics with the managerial decision and policy making •Allows for a diversity of products such as normal, inferior, superior price sensitive or elastic advertising elastic or inelastic, etc. PERSONNEL The “Personnel” simulation is used in junior-senior and graduate level personnel courses. This simulation provides the student with information on a sales office having levels of salespersons. Higher level sales- persons sell more and have lower turnover. Salespersons move to each succeeding level through training programs. All entry level salespersons are hired into the lowest level; they begin with an orientation period and typically have lower sales and higher initial turnover. Students may select one of two selection procedures: the first is moderate in cost, but does not always make the best selection; the second provides better selection decisions, but is more expensive. Growth is limited to a fixed percent of the total salesforce each year. Students attempt to maximize profits over a five year period through optimal hiring and training decisions. Developments in Business Simulation & Experiential Exercises, Volume 9, 1982 Observed advantages of the simulation include: •The opportunity for students to develop a systematic approach to problem solving •Given a systematic approach, students begin to develop an awareness for some of the cost functions involved in selection and training •The simulation allows solutions (decisions to be interrelated, i.e. recruiting large numbers of sales-. persons increases costs, but allows economies of scale in later training programs PRODUCTION THEORY - AN EMPIRICAL EXERCISE An exercise similar to the empirical demand case is available for students of managerial economics. The students are given a simulated data on output and inputs (number of shifts or production lines). Each student gets a different set of data. Figure XII illustrates such a data set. The function is similar to curve I section A in Figure XIII. Some randomly selected students are confronted with changing technology during the time frame. This may occur as a shift as illustrated in section B, or as an increasing function over time as demonstrated by III in section B. Figure XIII Technological Consideration It is the students, task with econometric analysis to describe the production process. In their analysis, they are to relate their findings to microeconomic theory such as elasticities of output, diminishing returns, changing technology, and returns to scale. Some of the potential benefits of this exercise include: .Gaining an appreciation for the practical components of microeconomic theory Maining an appreciation for the sensitivity of econometric analysis particularly when dealing with changing technology MANPOWER This simulation is used in a graduate manpower forecasting seminar. Students are introduced to an organization with three levels of managerial positions and data on promotions, terminations, etc. From this data, they establish a matrix of transitional probabilities for personnel movement. They then enter being-ning staffing data and use the program to produce a Markov analysis of future staffing levels. Once the students are familiar with the process, they are allowed to hire new managers into the lowest (entry) level on an annual basis. Their goal is to achieve desired staffing quotas for all three levels. This simulation has produced the following observed benefits: •Students may use this trail and error approach without large amounts of tedious calculations •Problems can be assigned with infeasible goals to help demonstrate the need for planned personnel programs related to the transitional probabilities •The long range effect of short-range hiring decisions are easily demonstrated SUMMARY Several mini simulations used by the authors have been described and the benefits of each listed. These simulations are diverse in nature and are used in a variety of courses, but the basic reason for their use and many of the benefits derived from them are similar. The simulations all appear to aid the learning process, no matter what the topic, by presenting the material in an interesting fashion with decision making as the common theme. Our observations, confirmed by numerous other authors, show that most students enjoy the simulations because they are participatory in nature. They also allow the students to focus on the decision making aspects of a problem without getting bogged down in tedious calculations and without the frequent calculation errors which lead to erroneous decisions and frustration, A secondary advantage of frequent use of computer based mini simulations is the familiarization of the student with the computer. Students exposed to a number of these simulations seem to experience a decrease in the “computer anxiety” one often finds among non-technical students. Table of Contents Volume 9, 1982 The Value of Conjoint Analysis in Enhancing Experiential Learning The Effect of Participation in a Collective Bargaining Simulation on the Expectations and Attitudes of Union and Management Representatives Conflict Resolution in Experiential Learning The Use of Simulation to Test Theories of Bargaining in a Business Context The Nominal Group Technique: A Vehicle for Improving Case Method Courses A Framework for Developing a Business Policy Case Produce Your Own Video Cases for Classroom Use: A Demonstration An Experiential Effect from Charismatic Encounters Nine Topic Oriented Mini Simulations: Descriptions, Purposes, and Observations A Hospital Simulator (HOSPSIM) A Report of the Model and Results Expected from Field Testing An Evaluation of SLIM (A System Laboratory for Information Management) An Experiential Exercise Introducing Students to the Role Ambiguity Faced by Salespersons The Advertising Research Project as an Innovative Experiential Learning Technique The Small Group Research Project: An Experiential Learning Approach for Undergraduate Marketing Research Students The Relationship of Cognitive Style Maps to the Preference for Experiential Learning of Undergraduate Students The Learning Style Inventory Debate Revisited: An Empirical Assessment fo the Construct Validity Issue Related to Experiential Learning Theory Conducting a Classroom to Facilitate Career Goal Attainment Corporation Executives' Ratings of Policy Learning Techniques The Generation and Application of Evaluation Criteria for Management Policy and Strategy Simulation Games Experiential Opportunities with Microcomputers Leading Students to Learning: The Teacher's Obligation An Experiment in Teaching Principles Courses: The Mini Debate Formula Developing Creative Thinking Through Experiential Learning Heuristic and Systematic Evaluation of Policy: Exercise in Decision Making A Case Study Approach for the Litigation Decision: Employing Decision Analysis to Determine When a Business Should Settle or Go to Court Learning Negotiation Skills Through Simulation Union vs. Management: A Simulation of Collective Bargaining in Action Inside the Black Box: An Analysis of Underlying Demand Functions in Contemporary Business Simulations A Review of Channel Exercises and the Description of a New Alternative SIMCON I: A computer Based Simulation Model for Evaluating Physical Distribution Strategies Involving Order Consolidation Toward Competency-Based Management Education: The Interpersonal/Communications cluster The Value of Pre-Teaching in Role Playing Some Effects of Positive Personal Reinforcement upon Socializing Students in an Experiential Learning Course Who Gains and Who Does Not from Experiential learning Toward the Ultimate Experiential Exercise, the Student View Simulating Professional Writing Experiences in the Classroom The Johari Window as a Measure of Personal Development Windows Into Management: A Participative Aid to Learning Get Your Faculty Involved A Pedagogical Approach to Business Gaming for the Commuter Student Super Service for Computer Game Administrators Expand the Role of Simulation with Creative Scenarios The Delivery, Administration, and Evaluation of an Executive Development Program Using a Total Enterprise Business Game An Application of Experiential Learning in International Trade and Foreign Direct Investment International Management: Building Bridges Analysis of a Business Simulation Exercise: Organizational Survival and Success The FALRIS Organizational Scavenger Hunt Trainee V. Trainee Subordinates' Evaluation of Experiential Learning Longitudinal Analysis of an Innovative Teaching Intervention Student Perceptions of Effective Teacher Behaviors Revisited Realism and Learning: The Evolution of a Management Game A Merger and Acquisition Simulation A Stock Market Investor Simulation Experiential Learning in Consumer Behavior: Perceptual and Attitude Change Exercises The Recycling Industry Problems of Women in Management: A Role Playing Exercise for a Course in Contemporary Organizational Problems Experimental Three Weekend Course: Empirical Results A Process for the Analysis and Development of Course Content and Instructional Methodology for Large Class Sections Problems Associated with the Assessment of Experiential learning Using the Multiple Choice Test Combining Lecture and Simulation Teaching Methodologies Qualitative Determinants of Team Performance in a Simulation Game The Effects of Different Team Sizes on Business Game Performance Comparison of Problem-Solving Technologies: A Free Simulation Approach Consistency in Business Games A computer Simulation of Personnel Selection Decisions Giving Praise Exercise Job Enrichment A Look at the Spoken and Written Word in Organizations A Pattern of Group Communication A New Generation in Business Simulation Adapting Mainframe Business Simulations to Min Computers File Access is the Essential Prerequisite to Time-Flexible and Interactive Computer Simulation A Microcomputer Simulation for Teaching Retail Location Strategy Blocks & Chips: A computer-Assisted, Geno-Typical Entrepreneurial Game Development of a Self-Paced Course in Business Statistics The Involvement of Student Bodies in the Teaching of Advanced Technical Concepts Systems Learning Sequence: An Experiential Course Module for Management Information Systems An Experiential Approach to Developing Managerial Competencies Communication Research, Inc. An Experiential Learning Activity Developed as a Practicum for a Course in Organizational Communication