IBE 250 Integrated Business and Engineering Honors Program Junior Lab 2011


Instructor          Dr. Robert H. Storer

                        Office:              477 Mohler Laboratory

                        Telephone:        758-4436

                        E-mail:  rhs2@lehigh.edu

                        Class Hours:     Thur, 1:10-4 p.m. in 121-122 Mohler


                        Office Hours:    After class or by appointment

TA                   Rob Howley  roh210@Lehigh.EDU

Webpage         IBE 250 on Course Site.


Objective         The objectives of this course are to gain an understanding of the complexities and depth of decisions associated with the management of operations of a company through lectures and a team competition.  We also cover quantitative subjects and tools in the field of Operations Management that are further illustrated through the game.


Prerequisites     IBE junior standing.


Grading            Business Operations Game Success.......…      

Experimental round                               10%

Serious round                                       30%

                        Weekly Team Assignments………………       20%

                        Weekly Individual Quizzes ……………...        15%

Final Presentation ..................................…      15%

Team Grade (did you do your fair

share according to your team mates)……..       10%


Course             This course is truly a “trial by fire” as you will compete in a simulated business environment over the course of the semester while learning relevant analytical techniques.  It is likely, no it is certain, that you will have to make various decisions before we discuss them in class.


Bus. Game       A business game simulation competition will occur over the course of the semester (12 weeks).  Students will make weekly decisions in teams.  The goal is to amass the greatest amount of assets by the end of the semester.


Assignments     Most weeks you will be expected do assignments involving the analytic tools we teach in lecture.  These assignments will be done in teams.  Following each lecture, we will have a lab session that should help you do the assignments.  The assignments will make heavy use of Excel, and in particular the “Solver” tool in Excel.


Quizzes            We will also have short multiple choice quizzes most weeks.  These should be easy if you pay attention in lecture and work on the assignments.

                        (Students last year really hated the quizzes…we can discuss)


Team Grade     Your team members will provide a grade for you to be incorporated into your overall grade (slackers beware!)


Brief overview of the game: 

You compete against several other teams in the CD/DVD storage rack market.  Each company is located in a different city and you sell your wares (if you choose to) in your city and those of your competition.  Each week, you will make the following decisions:


  • How much to produce?  This is limited by the amount of raw materials you procure and your production capacity (a production line in a plant produces 1000 units per period).  You start with one plant and four production lines.  Equipment in the lines will deteriorate each period (and lose capacity) if not maintained.
  • Where to store inventory?  You may keep raw material or finished goods inventory at a plant or a warehouse.
  • Where to sell?  You can transport the storage racks to any other location (at a cost).
  • What price?  You set the price of your product in each market.  Sales are determined by price, appeal, and competition.
  • Advertise?  You can advertise in each region to help boost sales.
  • How much capacity?  You can add production lines (maximum of five per plant), build new plants, or abandon (sell) plants.  You may also build warehouses to store goods at lower costs.  Transportation between plants and warehouses is also cheaper.
  • Should I raise more capital?  You can sell shares of stock in your company to raise money, although this impacts your share price.  You may also pay dividends on your stock.  Money may also be borrowed from a bank or certificates of deposit may be purchased.
  • Should I invest elsewhere?  All companies trade on the market and thus, you can invest in any other company (including your own).
  • Numerous other decisions including line repair, cost control programs, espionage, etc.


Historically, sales have been similar in all cities, roughly between 2000 and 10,000 units per period with prices for the racks between $10 and $50.  These numbers are dependent on various factors, including costs, competition, and the economic cycle.


To give you rough ideas of the magnitudes of costs (these change with each period in the game):

  • Raw materials: $4 per unit (one unit required for one end product unit)
  • Production costs: $3 per unit
  • Overhead costs: 5% of capital assets
  • Plant cost: $100,000
  • Line cost: $10,000
  • Warehouse cost: $30,000
  • Transport cost (to customer): $0.005 per unit per mile plus $200 per 500 units
  • Transport cost (to other plant/warehouse): $0.0005 per unit per mile


Your initial asset base consists of:

  • $300,000 cash
  • 1 plant with 4 production lines (valued at $140,000 in total)
  • 20,000 shares of stock (your company) valued at $20/share.
  • 4,000 units of raw material


Learning more about the business Game


Several documents explaining the game have been posted on Course Site.  You should study them carefully.  These documents are correct to the best of our ability.  However, every year we discover a couple of mistakes or inconsistencies.  If you have questions, we will do our best to answer them, but only if they are “fair” questions.


Caveat: The course leader (Storer) reserves the right to fine and/or imprison any player or team for illegal and unethical behavior.