Capacity Management at Littlefield Technologies

Background
In early January, Littlefield Technologies (LT) opened its first and only factory to produce
its newly developed Digital Satellite System (DSS) receivers. LT mainly sells to retailers
and small manufacturers using the DSS’s in more complex products. LT competes by
promising to ship a receiver within 24 hours of receiving the order, or the customer will
receive a rebate based on the delay.
In the initial months, demand is expected to grow linearly, stabilizing after about 5
months. After another month, demand should begin to decline linearly. Although orders
arrive randomly to LT, management expects that, on average, demand will follow the
expected trends.
Management’s main concern is managing the capacity of the factory in response to the
complex demand pattern predicted. Delays resulting from insufficient capacity would
undermine LT’s promised lead times and ultimately force LT to turn away orders.
Operations Policies at Littlefield
Currently there is one sample preprarer, one tester, and one centrifuge. Jobs at the tester
are scheduled First-In-First-Out (FIFO), but you can give priority status either to the short
initial tests or the long final tests. You may buy or sell or machines by clicking on the
desired station and then the “edit data” button on the resulting menu. Click on the tester
station and then “edit data” to change the queue sequencing rule at the tester. The times to
perform each step are:
Step 1 Step 2 Step 3 Step 4
Stuffer Tester Tuner Tester
5.3 hours 0.5 hours 1.8 hours 1.4 hours
Assignment
It is now late February, and LT has started to notice that a few of their receivers have been
delivered after their due dates. 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 to maximize the factory’s overall cash position. Currently there is one
board stuffing machine, one tester, and one tuning machine.
When the assignment 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 run at
a rate of 1 simulated day per 1 real hour for the next week. After the assignment window
ends, an additional 50 days of simulation will be executed at once. Thus, there will be a total
of 268 days of simulation corresponding to a product life time of about 9 months. After this
simulation is over, you can check the status of your factory, but the factory will no longer be
running. Also any remaining machines will have zero value at the end of game.
Your team should turn in one two-page summary f what actions you took during the week
you had access to the factory, why you took those actions, and in retrospect whether you
think you did the right thing. Show analysis to justify your conclusions. Your team’s grade
will be partially based on your performance, but mainly based on your summary.
As you manage your factory and then write your summary, be sure to consider the following:
• How did you forecast demand?
• How did you translate your demand forecast to machine requirements?
• How did you decide when to purchase the machines you purchased?
• Did you sell any machines? If so, how did you decide when and how many to sell?
• Did you change the queue sequencing rule? Why?