Assignment - Littlefield Simulation

A report submitted to
Prof. Janat Shah

In partial fulfilment of the requirements of the course

Operations Management
By
Group A5, Section A
Gaurav Bhardwaj (166048),
Manvi Kothari (166078),
Meghalee Pegu (166079),
Mythreya Reddy (166070),
Romil Jain (166136),
Vaibhav Khushwaha (166190)

On
30-11-2016

Littlefi
eld Simulation Game
Simulation game was a job which assembles digital satellite system receivers. There were
four steps carried out in the assembly process at three stations which were Board Stuffing,
Testing, and Tuning.

Game strategy: We discussed all the possible operations management concepts which
could have been applied to the game
1. Process Analysis
2. Capacity Utilization of Machine
3. Whether there is any bottleneck or not
4. Impact of bottleneck on our overall job completion
5. How we can maximize utilization of machines so that no queue is generated.
During the trial version, we figured out all these concepts needs to be applied for better
results. Trial versions mistakes made us realized what repercussions it will lead to if we won't
keep track of the game on the regular basis.
When actual simulation started we already have a glimpse of how to proceed and strategy to
play the actual game.
Step 1: From trial version experience we knew that first few days were very crucial and we
analyzed each machine and its utilization from the historic data and bought the machine at
station 1 on day 54. Although, after buying we realized that machine at station 3 had more
capacity utilization then machine 1 and almost every day it was continually reaching up to its
maximum potential. We could have been benefitted if we would have bought the machine at
station 3 instead. Hence to decrease Station 3 utilization we changed the priority from FIFO

to step 4 which helped us little to clear the queuing at the station 3 moreover the unitization
kept the same.
Step 2: On day 55 we saw that lead time was below 2 days, therefore, we thought of
shifting from contract 1 to contract 2 but due to increasing demand and station 3 maximum
utilization the lead time increased beyond 2 days and we had to suffer huge revenue losses
during that particular day hence we switched back to contract 1. Inventory level also went
down to 0 for three consecutive days during this same period due to which we changed our
reorder point from 2400 to 6000 on day 64 which helped in increasing our inventory level.
These few circumstances showed us that lead time should be stable for 2-3 consecutive days
before changing our contract or it could also direct us to huge revenue losses.
Step 3: On day 91, we bought the machine at station 3, after this queuing at station 3 went
from 393 to 69 and after some days there was no queuing at all, the utilization of the machine
jumped down from the 1 to 0.27 on day 94. Lead time also started falling down to 0.41 as the
job completion rate was increasing due to the new machine installation therefore at the end of
95th day we finally switched our contract to 3. After switching to contract 3 we kept track of
lead time although it never went above 1 thereafter.
Step 4: The utilization at both the station 1 and 3 totally depended on the random job arrival,
we thought of selling station 3 machine but its retirement value was too less and it could
again increase the lead time from 0.50 which leads to revenue loss.
Step 5: After this, we just changed lot size when there was low job arrival so that they don't
have to wait for the 60 lot to process and changed the reorder point according to the demand.
This decision created some revenue loss as we didn't keep the regular job arrival check and 2
X 30 lot size increased the machine product cycle hence during high demand it was not able
to fulfil the demand which increased our lead time and therefore revenue decreased as low as
400 hence later on we switched the lot size back to the 2 X 60.
Step 6: At this point of time we had realized all the factors of the game and gained expertise
in the game as well, we were able to complete the jobs on time. Thereafter all we did was
monitor the game, kept the regular check on the job arrival and the lead time accordingly.
Changed reorder point and order quantity to meet the required demand which helped us to
gain the maximum revenue average per day around 1215 (approx., during contract 3). The
3

average queuing for the machine at station 1 was 37.83 and the machine at station 3 were on
an average 7.344 which clearly shows that there was no much queuing and the jobs
demanded were finished under the specified time. In the end we finished the game at ninth
position. We were going great but during the last days we forgot to check the status of game
and due to which inventory got ordered on the last day hence we jumped down from 1 st
position to 9th. .

Our Learnings
1. Reorder Point: While playing this simulation game we understood the importance
of reorder point and its implementation in real life, it taught us what level of inventory
we should order which triggers an action to replenish the inventory. Initially, we
adjusted at several time based on the job arrivals and available inventory stock.
During simulation game when our inventory was as low as 0 for three days we
realized that we should keep the safety stock to meet the unpredictable job arrival in
future. Basically, its an extra stock/inventory that is maintained to diminish the risk
of stock outs due to the unpredictable demand and supply mismatch.
2. Reorder Quantity: It is the inventory level which needs to be replaced when the
inventory goes below the reorder time hence it signals the inventory to be ordered for
placement of a replenishment inventory. During replacement of order, we have to take
account of several other factors as well like consumption of the inventory, order lead
time and the safety stock required as well. Therefore we learned the concept of EOQ
(economic order of quantity) when job arrivals were unpredictable. Thereafter with
the help of EOQ we were able to meet demand and as well as prevented the
overstocking. Initially, we not financially stable hence we planned our each and every
movement carefully.
3. Sequencing of Queue: In the beginning when the length of the queue was
increasing at the station 3 machine we changed the priority from FIFO to step 4 which
helped us to learn how we can modify the priority to lower the queue building at the
particular station.
4. The machine at Various Station: Initially we learned how to check the unitisation
and which machine should be purchased or not. As we already know the concept of
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the bottleneck hence we checked for it and purchased the machine accordingly. When
we saw that the utilization of the machine was not maximum then we calculated the
retirement value of the machine advantages and not selling the machine advantages
from which we concluded that selling machine could lead to the increase in lead time
hence loss of revenue which was greater than the retirement value. Thereafter we kept
underutilized machine just to generate a maximum profit.
5. Contracts: There were three contracts available at the different lead time and those
were as follows:
Contract 1: Quoted lead time = 7 days, maximum lead time 14 days,

maximum revenue = 750

Contract 2: Quoted lead time = 1 days, maximum lead time 2 days, maximum

revenue = 1000
Contract 3: Quoted lead time = 0.5 day(s), maximum lead time 1 day(s),

maximum revenue = 1250

Each contract had its different guidelines and agreements. The larger revenue was
generated as the lead time shortens if we were unable to deliver then the penalties of
not able to deliver on time was also high. Hence it taught us to manage the lead time
and to do the same we need to manage other things like the lot, inventory, capacity
and other parameters.

Overall Insights from the Simulation Game:

We had a great experience while playing the game. The job of production manager is
pretty difficult to manage. As in the game, demand was uncertain which if not
forecasted with mechanical calculation, could result in high inventory or falling short
of delivering the demand in time. The major decision was to be made what level to
keep the safety stock at. As in the game, there was no inventory holding cast nor there
was a change in lead time of the supplier (fixed at 4 - days) these things are the major
costing factors which production manager has to consider before ordering the EOQ
and keeping the safety stock. Through this process, we got the understanding of the
various concept like process analysis, capacity management, production control,
demand forecasting and lead time management.