Background
The Nissan Motor Manufacturing plant in the United Kingdom needed to optimize production processes for Nissan's new Qashqai model, a sport utility vehicle with a unique look. The Nissan plant considered two options, either the traditional industrial engineering methods or the use of a simulation model.
Which solution-manual calculations or simulation software?
The traditional manual calculation method included "calculations determining the capacity using a planned system efficiency percentage" and creation of production charts. Manual calculations are too time consuming, in which requires more labor costs, and has a higher risk of errors.
Nissan found that the simulation approach was better suited since the analysis is more in-depth. First, the simulation model software created a scenario for each smaller production cell in the line to improve process times. After the smaller cells were improved, the Nissan team produced a large-scale model with all the smaller production cell data combined.
Possible Data for the Simulation
Possible data for the simulation analyses are machine processing times, capacity of machine and labor, idle time (if applicable), number of machines available, demand for the product, number of workers available, batch sizes, and probability of defects. Qualitative data needed may be the condition of the machinery, worker motivation, and order of tasks. Nissan may also keep in mind lead times and shipment times that affect its customer service levels.
What kind of results does Nissan want?
Nissan probably wants faster processing times, increased capacity, eliminated/reduced idle time, improved quality, and a low defect number. Each individual model should be analyzed before moving on to the large-scale model for analysis.
How are simulation models helpful?
Simulation models have helped Nissan by providing a visual, interactive, and dynamic aid to decision makers. Nissan doesn't have to shut down its plant just to test a new methodology or process, decision makers can change variables and scenarios in the simulation model to represent the real-life process. In addition, simulation models can help improve the production capacity due to the growing demand for the Qashqai model.
Unlike manual calculations, simulation models replicate calculations easily by just a few clicks. Where as in a hand simulation, calculations need to be completed from step one. By modeling scenarios, Nissan can find more feasible solutions for their production processes.
References
Car plant simulates production systems. Manufacturingtalk. 17 March, 2008.Retrieved March 19, 2008 from
http://www.manufacturingtalk.com/news/lan/lan111.html
Wednesday, March 19, 2008
Wednesday, March 12, 2008
Blog 5: A Simple Model in Finding Stock Value
Situation
The article, US Airways Shares Fall as JPMorgan Downgrades Airline Stocks, discusses the decrease in airline stock prices such as Tempe and other large airlines. Due to rising fuel prices and a weakening economy, Standard & Poor's Ratings Services plan to review the top ten US airline companies. For example, "US Airways stock closed at $9.98 per share Tuesday and dipped to $8.87 Wednesday before starting a rebound to end the day at $9.44 (Luebke 2007)."
Who is Affected?
Stock holders with risky stock such as the airline industry need to know when to buy in the market and when to sell their stock. In this situation, the main decision makers in this situation are stock holders such as the corporation and individuals.
What Model Should be Used?
A simple financial model known as the Dividend Discount Model (DDM). DDM tells you the value of equity, which is stock. Three variables are needed to determine the current value/price of stock. First, the dividend amounts are needed for a base period and for the following period after that. Second, the percentage of total expected return by investors (current income + price change), which is defined as variable R. Third, the annual growth rate from the base period and the next period is needed, which is defined as variable G. To find the stock's price, divide the next period's dividend amount by R minus G as so:
Price of Stock = Dividend of Next Period
__________________
R - G
How the Dividend Discount Model is Useful
The dividend discount model is a quick and dirty method for decisions in buying and selling securities. If the 'Price of Stock' from the model is less than the actual stock price, than the stock holders should try to sell their stock or on the other hand, potential investors should not buy the stock. If the 'Price of Stock' from the model is more than the actual stock price, then the potential buyers should buy the stock because it is undervalued, or stock holders may decide to keep the stock.
Although this model is simple, it is a quick way to evaluate stocks and is readily available with only a few necessary variables.
References
Luebke, Cathy. US Airways Shares Fall as JPMorgan Downgrades Airline Stocks. Phoenix Business Journal. 12 March 2008. Retrieved March 12, 2008 from http://www.bizjournals.com/phoenix/stories/2008/03/10/daily27.html?jst=b_ln_hl
The article, US Airways Shares Fall as JPMorgan Downgrades Airline Stocks, discusses the decrease in airline stock prices such as Tempe and other large airlines. Due to rising fuel prices and a weakening economy, Standard & Poor's Ratings Services plan to review the top ten US airline companies. For example, "US Airways stock closed at $9.98 per share Tuesday and dipped to $8.87 Wednesday before starting a rebound to end the day at $9.44 (Luebke 2007)."
Who is Affected?
Stock holders with risky stock such as the airline industry need to know when to buy in the market and when to sell their stock. In this situation, the main decision makers in this situation are stock holders such as the corporation and individuals.
What Model Should be Used?
A simple financial model known as the Dividend Discount Model (DDM). DDM tells you the value of equity, which is stock. Three variables are needed to determine the current value/price of stock. First, the dividend amounts are needed for a base period and for the following period after that. Second, the percentage of total expected return by investors (current income + price change), which is defined as variable R. Third, the annual growth rate from the base period and the next period is needed, which is defined as variable G. To find the stock's price, divide the next period's dividend amount by R minus G as so:
Price of Stock = Dividend of Next Period
__________________
R - G
How the Dividend Discount Model is Useful
The dividend discount model is a quick and dirty method for decisions in buying and selling securities. If the 'Price of Stock' from the model is less than the actual stock price, than the stock holders should try to sell their stock or on the other hand, potential investors should not buy the stock. If the 'Price of Stock' from the model is more than the actual stock price, then the potential buyers should buy the stock because it is undervalued, or stock holders may decide to keep the stock.
Although this model is simple, it is a quick way to evaluate stocks and is readily available with only a few necessary variables.
References
Luebke, Cathy. US Airways Shares Fall as JPMorgan Downgrades Airline Stocks. Phoenix Business Journal. 12 March 2008. Retrieved March 12, 2008 from http://www.bizjournals.com/phoenix/stories/2008/03/10/daily27.html?jst=b_ln_hl
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