LITTLEFIELD

INITIAL
ANALYSIS

Submitted By
BM: PPC: Group 9
Abhishek Pal: B14003
Harsh Aggarwal: B14145
Manjot Singh Saini: B14152
Prashant Jha: B14160

Introduction
The virtual factory seems simple enough with 3 workstations viz. Stuffing, testing
and tuning. Buffers are placed before every workstation. The number of machines in
each workstation is different and carries a different cost.
Workstation
1-Stuffing
2-Testing
3-Tuning

No of Machines
3
1
1

Cost
90000
80000
100000

Before starting the game we need to pinpoint the areas which would play a role in
maximizing cash balance

Major Decision Areas

According to us the major decision areas in the simulation will be
a.
b.
c.
d.
e.

Reorder Quantity
Reorder point
Safety Stock
Lot size
Maximum Inventory

Key Variables
The key variables that would affect the final decision areas include
1.
2.
3.
4.
5.
6.
7.

Supplier Lead time

Supplier lot size
Customer Demand
Inventory before each of the workstations
Utilization of each workstation
Cycle time
Takt time

We would try and present our take on these key variables

Customer Demand
Based on the number of jobs accepted/day average customer demand comes out be
12.24 jobs/day. Yearly demand can be forecasted to be 2937.6 jobs taking the
number of working days to be 240/year.
Demand for raw materials

Since the average customer demand is 2937.6 jobs, and the number of kits required
in 1 job is 60, the yearly demand for raw materials comes out to be 176256 kits
Reorder Quantity
In order to minimize costs, the Economic order quantity can be calculated based on
the yearly demand for raw material (kits). The ordering cost mentioned is
$1000/order. The inventory carrying costs has been assumed as 60% of per unit
cost of kit ($10/kit). Given such inputs, EOQ comes out to be 7664.98 kits. However
since the lot size given is 60, EOQ needs to be in multiples of 60. Hence The Reorder
quantity that we have decided is 7680 kits (128 samples of lot size 60). Note that
this different from the reorder quantity mentioned in the simulation, which is 7200
kits
Reorder Point
The average lead time of supplier has been mentioned as 4 days. Hence, the
reorder point must be such to as to cover the demand of 4 days
Customer demand for 4 days: 12.24 X 4=48.96 jobs
Demand in terms of number of kits: 2937.6 kits
Since lot size is 60, reorder point to the nearest multiple of 60: 2940 kits. This is also
different from that specified in the simulation (1440 kits)
Safety Stock
The demand variability for a period of 4 days can be calculated to be 6.87(jobs).
Assuming a service level of 95% ensured by supplier, we need to maintain a safety
stock of 6.87 X 1.64(z-value for 95% service level)X 60(to convert it into no of kits.
This figure comes out to be 676. Hence the safety stock in nearest multiple of 60
comes out to be 720 kits
Cycle Time
Assuming working hours to be 16 per day and using the data given on completed
orders/day(average: 11.46 jobs), we can estimate the cycle time of the process.
This comes out to be 1.05 min/kit
Takt Time
Using the data on customer orders, takt time can be calculated as (assuming 16
hours of work pr day), 0.98 kit/day. Since cyle time is more than takt time inventory
builds up
Bottleneck Identification

In order to identify bottleneck the average queue size before every workstation was
compared. The workstation with the largest orders in queue can be assumed to be
the bottleneck. In this case the average queue size for workstation 1, 2 and 3 are
757, 342 and 585 kits respectively. Hence Workstation 1 can be concluded to be the
bottleneck for the process
Machine Utilization rates
The average machine utilization rates for workstation 1, 2 and 3 comes out to be
86.88%, 91.5% and 88.28%