Littlefield Writeup

I. Strategy – Before the Start of Simulation

Our main goal for the Littlefield Technologies Simulation was to maximize profit while minimizing the inventory and working capital. We began by calculating the Efficient Order Quantity (EOQ) based on the average customer orders for the first fifty days. Since the amount of cash at the start of the simulation is limited, we set the reorder quantity as close to the EOQ as possible (See Appendix – Calculation 1.1). We did not want to incur unnecessary order costs early in the simulation.  As for the contract, we decided to be flexible with our decision and will switch to the best contract we could, which is dependent on the lead time we will have. For the last 100 days, we decided to estimate/forecast our demand so we could order the estimated quantity right before the last inventory. Our reasoning was, firstly, we did not want money, therefore cash, tied up in left over inventory. Unused inventory would cut into our profits when the simulation ends. Secondly, this would minimize our order costs based on our calculations (See Appendix – Calculation 1.2).  

I. Strategy – Decisions made during the simulation

        At the start of the simulation, we could see there was an obvious bottleneck at station 3 (at 100% utilization most of the time). We decided to buy 1 more machine at this station once we had enough cash. We also decided to buy another machine at station 1 since it had also reached 100% utilization. For this additional machine, we had decided to take out a loan. We determined that the machine would pay for itself quickly since we could reduce our lead time (thus switch to contract 3) once the machine was purchased. The loan was also paid off as soon as possible because we did not want accrue any unnecessary interests.

        The orders releases were kept as 1 lot of 60 receivers because we did not want to increase our setup times since we were already at full capacity at the beginning of the simulation....