This exercise, based on an exercise by Boritz, Toy and Favron, will help you discover the usefulness of parallel simulation.

As a recently hired IS auditor, you have been assigned to the Wacky Widgets audit. Wacky Widgets is a large manufacturer of custom machined parts. The manufacturing process relies on highly-skilled labor to fabricate the parts, and direct labor accounts for 65% of cost of goods sold.

To motivate employees to maintain productivity and to reduce absenteeism, Wacky Widgets has implemented an incentive plan that allows employees to receive bonuses based on attendance, seniority, and exceptional performance. All employees are eligible to receive all three bonuses. This is the first year that the program has been in place.

During your inquiry about the new computer application to calculate the bonuses, you discover that the program was coded by a junior programmer who only had 6 months of programming experience. This practice is contrary to Wacky Widget's normal policy, which requires new application programming to be completed by a senior programmer. Management has defended this deviation from policy based on the relatively simple nature of the programming required. However, to reduce your assessed level of risk, you have decided to test the new bonus program using parallel simulation.

Your meeting with the programmer provided the following details of the bonus calculation.

1. Seniority Bonus: If an employee has been with the company for at least five years, and if that employee has missed less than 20 days during the year, the employee received a bonus of 20% of base monthly salary.
2. Presence Bonus: If an employee has been with the company for at least 2 years, and if that employee has missed less than 10 days during the year, the employee receives a bonus of 20% of base monthly salary. This bonus is reduced by 1.2% for each day the employee has been absent. If an employee has been with the company for less than 2 years, and if that employee has never been absent during the year, the employee receives a bonus of 5% of base monthly salary.
3. Exceptional Performance Bonus: If an employee has never been absent during the year, and if that employee's premium value is greater than 15, the employee receives a bonus of (n-15)*5%, where n = the employee's premium value.

NOTE: Company policy provides each employee with 20 days of holiday pay. These holiday absences are not to be used for bonus calculation. For example, if an employee has 30 absences recorded during the year, this is reduced by the 20 days of holiday pay to 10 absences for bonus calculation. If an employee has been absent fewer than 20 days, that employee is assumed to have no absences for bonus calculation.

Your manager has requested that you conduct a parallel simulation to test the data. The layout of the data file is below.

Columns 1-6 - Employee Number
Columns 7-8 - Years of Service
Columns 9-11 - Absences in Days
Columns 12-15 - Monthly Salary in Dollars
Columns 16-17 - Premium Value for Exception Service

Top