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LITTLEFIELD

INITIAL
ANALYSIS

Submitted By
BM: PPC : Group 1

Roll No.
B13003
B13134
B13137
B13176

Name
Abhra Chaudhuri
Anirban Chakraborty
Archit Singh
Supratim Gupta

LITTLEFIELD SIMULATION
Introduction:
On preliminary investigation the Littlefield simulation presents itself as a simplified factory
environment where various operational decisions have to be made over 200 simulated days to
maximize the cash balance.
Though the virtual factory is simple enough with just 4 work stations, viz. stuffing, testing and
tuning and only four steps in the process flow, closer analysis reveals there are a number of
decisions hidden within the simulation in order to complete it successfully.
Before starting the game we have tried to pinpoint the areas which we think will play the
deciding role in determining which teams outperform the others. In this brief summary we have
tried to categorize those areas and pin down our gut feeling with regards to achieving success
on each of the parameters.

Major Decision Areas:


According to us the major decision areas in the simulation will be:
a)
b)
c)
d)
e)
f)
g)

Reorder Point
Order Quantity
Machine procurement
Demand forecasting
Contract Selection
Lead time Control
Lot size at machines

We will try and present our take on these key issues briefly and how we plan to tackle them:
a) As mentioned in the introduction on the website the Reorder Point can be any multiple
of 60. We believe the key trade off in deciding the reorder point would be to find a
balance between the risks of running out of stock and subsequently be unable to service
customer demand and the increased holding costs associated with keeping a high

b)

c)

d)

e)

f)

inventory level permanently. Striking the ideal balance here would result in optimizing
operational cash flows.
The Reorder Quantity of order also has to be a multiple of 60. The fixed cost associated
with each order is stated as $ 1000 and cost per item is $ 10. So it would seem logical to
maximize the order as much as possible in order to spread the fixed cost over a large
number of items. However, ordering a quantity that is too large would result in
inventory hoarding and exorbitant holding charges which may reduce cash flows
alarmingly. This situation will be further worsened if there is a dip in the demand
following a large order as the large amount of RM will keep lying in the store without
getting processed and sold.
Machine procurement will probably have very severe implications as the price of all the
machines is very high in the range of $ 90,000 to $ 100,000. In order to make decisions
with regards to machine procurement the available demand data of the first 50 days will
have to be utilized in order to generate a forecasted demand over the entire game
period. Using this demand machine procurement will have to be planned and timed in
such a way that sufficient numbers of machines are present to service the peak demand
when possible. However, the cost implication of leaving the newly procured machines
idle if the forecasts suggest dip in demand after the peaks will also have to be taken into
consideration before deciding final procurement strategy. A cost benefit analysis will
have to be carried out in order to find whether buying machines is more beneficial than
sacrificing some demand in the peak periods rather than having the newly procured
machines lie idle after the demand slumps.
The demand data of the first 50 days will have to be studied to discover any perceptible
pattern in the demand. After this initial inspection a couple of apt forecasting models
will have to be applied to come up with a demand forecast which will define all future
capacity and procurement decisions.
It is mentioned that the default contract selected in the game has a payoff of $ 1000 for
delivery of 60 kits and all kits need to be supplied within a lead time of 24 hours to
ensure full payment. The payoff decreases to 0 linearly from 24 hours to a maximum of
72 hours of lead time. This loss in revenue will be a major determinant in capacity
incrementing decisions. Further the more lucrative and challenging contracts where
there is a higher payoff with lower lead times will have to be explored to calculate if it is
possible to maximize revenue.
Controlling the lead time so that the loss in revenues does not become higher than
procuring a new machine for the bottleneck will be one of the key decision areas. The
level of lead time increase will have to be monitored on short intervals to ensure that
the increase does not cause the revenues to suffer too heavily.

g) Another area which maybe tweaked around with to maximize efficiency and in turn
responsiveness is the lot size at each machine. The set up times of each machine will
have to utilized along with the processing time per raw kit in order to determine
whether there is benefit which lies in decreasing or increasing lot sizes at the machines

Conclusion:
If we are able to manage all these parameters effectively and function as a team we believe
we will be able to maximize our cash flow, while at the same time ensuring that our
responsiveness remains high and customers have to wait the lowest time possible for our
products. Due to the short period of 250 days over which the simulation will be running, we
look forward to taking educated proactive decisions based on forecasts and time study
calculations to stay ahead of the competition.