BUS221 | Littlefield Assignment1
Team presentations2 | April 25 - April 27, 2022
Contents
1 Background
2
2 The Challenge
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3 Detailed Factory Information
3.1 Demand Forecast . . . . . . . .
3.2 Orders . . . . . . . . . . . . . .
3.3 Contracts . . . . . . . . . . . .
3.4 Limit on Number of Jobs . . .
3.5 Equipment . . . . . . . . . . .
3.6 Processing Times . . . . . . . .
3.7 Priority at the Testing Station
3.8 Inventory . . . . . . . . . . . .
3.9 Interest on Cash . . . . . . . .
3.10 Timing . . . . . . . . . . . . . .
3.11 The Goal . . . . . . . . . . . .
4 The
4.1
4.2
4.3
4.4
4.5
4.6
Team Presentation
General Instructions .
Presentation Hints . .
Presentation Logistics
Grading . . . . . . . .
Academic Honesty . .
Getting Help . . . . .
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5 Time Table and Deliverables
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1
This note borrows heavily from one written by Samual C. Wood of the Stanford University Graduate
School of Business and has been adapted by Harry Groenevelt. Do not post or distribute.
2
You will attend one 35 minute session during which your team will give a 7.5 minute presentation (4
presentations per session). These sessions will be scheduled within the time period indicated.
1
1
Background
In early January, Littlefield Technologies (LT) opened its first and only factory to produce
its newly developed Digital Satellite System (DSS) receiver. LT mainly sells to retailers and
small manufacturers using the DSS’s in more complex products. LT charges a premium and
competes by promising to ship a receiver within 3 days (or less) of receiving the order, or
the customer will receive a rebate based on the delay.
The product life time of many high-tech electronic products is short, and the DSS receiver is
no exception. After 268 days of operation, the plant will cease producing the DSS receiver,
retool the factory and scrap any old tools.
During the first two months of this year, demand has been low but stable. During the third
month demand is expected to rise slowly as a few more early adopters purchase the new
receivers. During the third month, the firm will phase out an older product, and demand is
expected to increase rapidly at a roughly linear rate from the start of month 4, but should
stabilize by the end of month 6. After a month of stable demand during month 7, customer
demand should decline rapidly until the factory ceases production of this receiver. During
the entire run, orders arrive to LT randomly, but management expects that, on average,
demand will follow the trends outlined above.
Management’s main concern is managing the capacity of the factory in response to the complex demand pattern predicted. Delay resulting from insufficient capacity would undermine
LT’s promised lead times and ultimately force LT to turn away orders. Customers would
pay a significantly higher price if receivers could be produced within 1 days, and there is a
fairly large group of ‘elite’ customers who would pay a much larger premium for production
in 0.5 days. However, management is skeptical that these shorter lead times could ever be
consistently achieved.
2
The Challenge
It is now late February, and LT is concerned about its long-run ability to meet its lead-time
promises. In response, management has installed a high-powered operations team (you)
to manage the factory’s capacity. For the next 168 simulated days you must buy or sell
machines, adjust lot sizes, choose contracts, manage priorities and inventories in order to
maximize the factory’s overall cash position.
3
Detailed Factory Information
Note: information specific to the second simulation run is printed in italics.
3.1
Demand Forecast
During the first 90 days, demand is expected to be relatively flat at 2 to 3 orders per day.
From day 90 to day 180, demand will rise roughly linearly to a plateau during days 180 to
210. During this peak demand period, an average demand of 12 orders per day is predicted,
but actual demand on any given day can deviate substantially from that level. From day
2
210, demand is expected to decline graduallly, and when the simulation ends on day 268,
average daily demand is expected to be back at the level of the first 90 days.
The daily demands will be different in the second run. The demands follow the same pattern
in both runs (formally, the probability distribution of demand on any given day is the same
in both runs). However, the demands are random, and independent between the two runs, so
the realized demands will be different, in the same way that when rolling a die, the actual
number coming up can be different each roll while the probabilities of rolling a given number
are unchanged.
3.2
Orders
Orders for receivers arrive in batches of 120, and currently each order travels through the
factory in one lot of 120 kits/receivers. However, you may divide each order of 120 kits
into 2 lots of 60 kits, 3 lots of 40 kits, 5 lots of 24 kits or 8 lots of 15 kits. Each lot travels
independently through the factory, but the order is not shipped until all the receivers that
make up the order are completed. The manufacturing step on each machine consists of a
complex combination of automated and manual tasks such as loading a group of boards
and setting up fixtures. While most of the process time on any machine is proportional to
the size of the lot it is processing, factory management believes there are significant set-up
times for machines at one or two stations. However, the combination of tasks is sufficiently
complex that the factory has not been able to tease out how much of the process time is
independent of lot size and how much is proportional to the lot size.
3.3
Contracts
You have three contracts to choose from:
• In the default contract, orders completed within 3 days earn $1200. Late orders incur
a linear revenue penalty so that if an order takes longer than 6 days, no revenue is
realized. (Orders even later than that don’t incur additional penalties, but the factory
does have to produce and deliver them.)
• In the fast lead time contract, jobs completed within 1 days earn $1500. Late jobs
incur a linear revenue penalty such that jobs taking longer than 3 days to complete
earn no revenue.
• In the rush contract, jobs completed within 0.5 days earn $2000. Late jobs incur
a revenue penalty such that jobs taking longer than 1.0 days to complete earn no
revenue.
Note that the contract you choose has no impact on the number of orders you receive.
You may change lot size or contracts by clicking on the “Customer Order Queue” icon and
then clicking on “edit data”. Lot sizes and contractual terms are assigned to an order when
it arrives at the factory, and cannot be changed subsequently for that order (so orders
that arrive after you change contracts will be assigned to the new contract, but orders
accepted before the change fall under the old contract).
3
3.4
Limit on Number of Jobs
The factory can only hold 100 jobs of 120 receivers at a time (splitting orders has no impact
on this). Any order that arrives when there are already 100 (unfinished) jobs in the factory
will automatically be rejected and lost. There is no way for you to change this.
3.5
Equipment
You can buy or sell machines, or change scheduling at a machine, by clicking on the icon
corresponding to the machine type. When the simulation starts, the factory will have one
machine of each type, but more can be purchased and superfluous machines sold at the
following prices.
3.6
Station
Purchase price
Retirement price
Initial count
Board Stuffing
Testing
Tuning
$72,000
$84,000
$94,000
$10,000
$15,000
$20,000
2
1
1
Processing Times
During the first run, processing times on each of the machines are deterministic, i.e., each
job takes exactly the same amount of time to process. In the second run, at least one of
the machine types will have random processing times.
3.7
Priority at the Testing Station
You can change the rule used to decide the next lot to be processed by the Testing step.
The three choices are: a) priority to lots coming from Board Stuffing, b) priority to lots
coming from Tuning, and c) first-come, first-served.
3.8
Inventory
The raw material used in the factory is purchased in kits that cost $5.00 each3 . In addition,
each order placed for kits incurs a fixed cost of $1,250 per order. The lead time for kit
orders is 4 days. The inventory control policy followed for kit purchases is a periodic review
order-up-to policy and places an order every 6 days. In the first run you won’t be able to
change the parameters of the inventory control policy.
In the second simulation run you can change the inventory control policy parameters (the
review period and the order-up-to quantity). Note that running out of stock can be very
dangerous: job arrivals continue, while production is stopped due to a lack of raw material
kits. While the stock-out lasts, new orders will pile up and since orders are processed on
a first-come, first-served basis, many or all of those new orders are going to miss their
deadline. This results in no revenue coming in, while you will still have to pay for the kits
going into those orders and spend machine capacity to produce them.
3
One kit is needed to produce a board, so 120 kits are needed per customer order
4
3.9
Interest on Cash
During the entire simulation, cash on hand will earn interest at a rate of 12% per year.
3.10
Timing
When the simulation begins, there will already be 50 days of history available for your
review, representing the period from early January to late February. The simulator will
then run for 7 days at a rate of 24 simulated days per day, thus simulating 168 days of
factory operations in one week of real time. At the end of those 7 days, an additional 50
days will be simulated at maximum speed (this takes less than 1 minute real time). Thus
there will be a total of 50 + 168 + 50 = 268 simulated days, corresponding to a product life
time of about 9 months. After the simulation is over, you can still view and download your
factory data, but the factory will no longer be running. First run data will remain available
until about 48 hours before the second run, second run data will remain available until the
presentation documents are due.
3.11
The Goal
Your team’s standing in the competition will be determined by your factory’s cash balance when the simulation ends (after 268 simulated days). You begin the simulation with
$1,000,000 in cash on hand, and this will probably have grown a bit when you take control
of your factory after day 50. The team with the largest amount of cash on hand at the end
of the second run will get a 5% course credit, the other teams’ credit will be calculated as
Team Cash Balance − Donothing Cash Balance
max 0,
× 5%.
Winning Cash Balance − Donothing Cash Balance
Donothing is a built-in team that never makes any changes to its factory during the entire
simulation.
4
The Team Presentation
4.1
General Instructions
Your presentation must be based on your team’s second Littlefield simulation run. Your
presentation should be no longer than 7.5 minutes and should consist of no more than 8
slides (fewer is allowed), plus a title slide with your team’s name, the team members names,
and your team’s final cash balance and ranking. All team members should participate in
the presentation. Your presentation should address the following topics:
(i) Your capacity strategy: how many machines did you purchase, when did you purchase
them, and why. How did it work out?
(ii) Your contract strategy: what contract(s) did you use, when did you use them, and
why. How did it work out?
(iii) Your lot sizing strategy: what lot sizes did you use, when did you use them, and why.
How did it work out?
5
(iv) Your inventory control strategy: what inventory control parameter values did you use,
when were they in force, and why. How did it work out?
(v) What analyses did you use to come up with these strategies?
(vi) Any other issue related to the simulation that you feel was important.
(vii) A concluding slide should list the most important lessons (at least three) that you
learned form the simulation.
4.2
Presentation Hints
When explaining or motivating your strategy, avoid arguing for a strategy based on feelings
(“we felt that the right contract was x”) or looking only at one side of a trade-off (”we chose
the longest lead time contract because the penalty for the short lead time contract was so
high”). This adds no value to your presentation because it doesn’t provide your audience
with any insight. Applying the five why’s, one could ask “why did you feel that the right
contract was x”. After one or two more steps, you’ll realize that the only reasonable basis
is some kind of numerical analysis. Without analysis you’re just guessing, and you’re not
learning how to better manage the factory.
You have relatively little time during your presentation (this is not unusual: when you
give a presentation to a busy board of directors or the senior management team of your
company or division, you will often get only a few minutes to pitch your case), so you
have to carefully consider what is important and how to best present the main issues, and
rigorously cut what’s not needed. I think this means three things.
a) Your audience consists of fellow students who have all done the simulation. So you do
not need to explain how the simulation works, what the demand pattern is, etc. What
your audience doesn’t know is how your team managed your factory, what analysis
you did and what the results were, so that’s what you need to concentrate on.
b) It’s a cliché, but it’s true: a picture is worth a thousand words. A few well-chosen
graphics can tell a lot in a short amount of time.
c) Practice your presentation and time yourself. The 7.5-minute time limit will be strictly
enforced.
4.3
Presentation Logistics
Presentations will be given in Zoom sessions with 4 teams presenting. The session will be
about 35 minutes long. You must attend the entire session your team is presenting in, and
you are not allowed to attend any other sessions. Lateness will lead to a grade penalty of
10% per (part of a) presentation missed. Information about signing up for a presentation
session will be posted on Blackboard during the last week of March. Failure to participate
in your team’s simulation runs or failure to do your part in your team’s presentation will
result in a failing grade for the course, regardless of your scores for other course components.
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4.4
Grading
By default, all team members will receive the same score, based on their presentation. So
you should work together on the presentation as well, practice and polish the presentation
together.
All students must fill out two surveys on the functioning of their team: one after the first
run, and one after the presentations are concluded. Each survey not returned by the due
date will result in a 2.5% penalty. If either survey indicates that one or more students are
not functioning well, I will schedule a meeting with the entire team. Failure to do your fair
share of the work may result in a reduction of your Littlefield score.
Please note that there is no rubric for the LIttlefield presentation. It is important that you
think about your team’s run, what was important, what did you learn, and how can you
best communicate your team’s story. If I were to give out a rubric, it would become an
issue of “checking a few boxes” and getting a score.
4.5
Academic Honesty
The simulation runs and your presentation should be your team’s work. You should not
discuss the simulation, your strategy, etc., with anyone outside your group. Do not share
your work with anyone outside your group until all presentations are completed, and never
make your work or any part of it available to anyone who is taking or may take a future
version of the course. Failure to follow these rules is a violation of the Code of Academic
Honesty and will be treated as such.
4.6
Getting Help
I will be available during office hours and via the Discussion Forum on Blackboard. Finally,
I would like to alert you to the Writing and Speaking Center. This is a place where
you can find staff members who can provide critical feedback at any stage of the creation
process, from brainstorming to polishing the final version of your presentation. To learn
more about the Writing and Speaking Center services and/or to find a tutor, please visit
http://writing.rochester.edu or call 273-3577.
7
5
Time Table and Deliverables
The following are the major events and deadlines.
Date
Event
Mon 2/28, 23:59
Due: Littlefield Team Emails
Wed 3/2, 18:00 - Mon 3/14, 18:00
Team registration on Littlefield web site
Wed 3/16, 18:00 - Wed 3/23, 18:00
Littlefield Run 1
Mon 3/21, 23:59
Due: Run 1 Peer Evaluation Survey
Wed 3/23, 18:00 - Wed 3/30, 18:00
Due: presentation time slot survey
Fri 3/25, 23:59
Presentation times posted
Wed 4/6, 18:00 - Wed 4/13, 18:00
Littlefield Run 2
Sun 4/24, 18:00
Due: Presentation document
Mon 4/25 - Wed 4/27
Team Presentations
Fri 4/29, 23:59
Due: Run 2 Peer Evaluation Survey
Notes:
1. This time table represents the latest planned version; changes may occur and will be
announced on Blackboard. Up to date information will always be available on the
Littlefield page of the course’s Blackboard site.
2. Data for the first 50 days of simulated factory activity will be made available at least
24 hours before the start of a simulation run, i.e., at 6pm on Tue 3/15 and 6pm on
Tue 4/5 respectively.
8