Experiential Learning Simulation Game Case Study

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Register to read the introduction… The production decision will determine the end-of-period inventory balance even though managers do not directly enter an ending inventory decision.
Also, all decisions affecting cash flows for the period will determine the ending cash balance. Cash management is determined by the manager even though there is no decision entered for an ending cash balance. Both the inventory and cash balance policies need to be actively controlled by managers. The policies are controlled only by recognizing and managing the active decisions that affect these policies. Cash management is achieved by preparing budgeted or pro forma financial statements, which are described in Chapters 3 and 4.

The instructor will state the decisions players control and enter each quarter. A given quarter’s decisions cannot be repeated. The game is a multiple-period decision problem. Starting with an identical initial company, each manager makes her/his first set of decisions for quarter 2. The financial statements and summary information on the company received from the simulation of quarter 2 are then used to make decisions for quarter 3. This
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The game is a comprehensive case. The game and this text are constructed like a traditional case. Knowledge in finance, accounting, and other disciplines required for successful company management needs to be obtained from other sources. A finance text can reveal the impact of financial decisions and appropriate solution techniques for solving problems.
Example. A basic finance course covers the possible impact on a company’s cost of capital from either excess debt or excess equity. A manager who lacks this knowledge will likely underperform other company managers. The naïve manager would fail to monitor the effect of the debt-equity relationship on the cost of capital for her/his company and other companies. The manager could fail to adjust debt equity back toward more reasonable levels even in light of clear evidence of a poor policy, thus underperforming the more knowledgeable managers.

The game is interdisciplinary. In a successful company, financial management cannot be separated from decision making in other disciplines of business and economics. The production, marketing, and accounting functions are highly interrelated with the economic environment and optimal financial decisions. A

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