Littlefield Simulation Game

A report submitted to
Professor Janat Shah

In partial fulfilment of the requirements of the course

Operations Management
By
Group A7, Section A
Aman Agarwal
Nilanjana Guha
Nitish Padalkar
Praveen Pamnani
Sayali Waghmare
Soham Banerjee

166009
166095
166097
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On
30-11-2016

Littlefield Simulation Game

Our team played Littlefield simulation game in two stages, the first - a three day trial game,
followed by a 7 day game. With the trial version of the game, we understood the processes
and the dependencies between them. The actual version of the game was different from the

trial version in many ways, such as we could set reorder point and reorder quantity of the
inventory, we could change the type of contract and lot size for each contract. This report
focuses on the overall strategy adopted, decisions made to achieve the objective, rationale
behind the decisions made, their impact and the learnings from the game.
Game Strategy
The objective of the game was to maximize its cash reserves at the end of 486 days. The
game was already simulated to 50 days and we had access to the data like utilization of
machines, demand pattern, average lead time and so on. Three different options were
available when choosing the type of contract level for each incoming job i.e. C1, C2 and C3.
With C1, quoted lead time was 7 days and acceptable time was 14 days. For C2, the quoted
lead time was 1 day, whereas acceptable lead time was of 2 days and C3 had a quoted lead
time of 0.5 days and acceptable time of 1 day. The revenues obtained for C1, C2 and C3 were
$750, $1000 and $1250 respectively. The actual revenues achieved after each job were
inversely proportional to the lead times i.e. if the lead time increased beyond the quoted time,
a penalty was imposed.
The strategy adopted by the team was very simple i.e. to decrease the lead time and hence
increase revenues while at the same time keeping the costs at a minimum. To decrease the
lead time, we decided to purchase machines at station 1 and 3 in that order as both of these
machines were frequently utilized at their maximum capacity. To increase revenues, we
decided to change the contract level to C2 and C3 to obtain higher revenues. To decrease
costs, we decided to change the reorder quantity.
Key Decisions and their impact
1. Decision taken: Changing the contract level to C2, number of lots per order to 3 and
then change contract level to C3
Rationale: On day 50, we found that the average lead time of the completed jobs was
less than 0.5 days, hence we decided to change the contract level to C2 first and
change the number of lots per order to 3 i.e. 20 kits per lot and 3 lots per order. Even
with this change, we found that the average lead time was less than 0.5 days, and
hence we decided to change the contract level to C3.
Impact: This move backfired as the demand increased at the same time and hence the
average lead time increased to more than 2 days and this created a queue at stations 1
and 3 and our revenues dropped from 1000 to 0 over a span of four days.
2. Decision taken: Changing the contract level to C1, purchasing the machine at station1
along with reducing the reorder quantity to purchase maximum inventory with the
available cash.
Rationale: We changed the contract level to C1 as the lead time was greater than 2
days and a large queue was observed at station1 as all the machines were working at
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full capacity. To decrease this queue size, we decided to purchase a machine at station
1.
Impact: Queue size gradually decreased and we started earning revenues after clearing
the jobs accepted at contract levels C2 and C3. Also we changed the lot size back to
the default 60 kits per lot. As our cash reserves were depleted with purchase of
machine, we had to constantly monitor and change the re-order point and kit
continuously so as to be able to place an order worth the maximum cash reserves
available. As jobs were processed at faster rates at station1, a queue started to build up
at station 3. Also the utilization at station 1 reduced to less than 100%.
3. Decision taken: Assigning a higher priority at station 2 to step 4.
Rationale: Even after purchasing a machine at station 1, the average lead time did not
decrease to the original levels observed in the first fifty days. This could be explained
as there was a queue at station 3 and eventually the time taken for a job to be
completed increased further at station 2. Hence we changed the priority level to
reduce the average lead time.
Impact: Eventually after a few days, the queue at station 3 decreased to an average of
100 kits. Thus in effect, it took us almost 25 days to recover from the initial mishap
and bring the average lead time under 2 days.
4. Decision taken: Changing contract level to C2 and assigning the FIFO policy at
station
Rationale: Once lead time reduced to less than 2 days and the system became fairly
stable for a period of 4 days then we changed contract level to C2 to increase
revenues. And we changed the priority to FIFO as there were no queues any longer.
Impact: Higher average revenues were collected.
5. Decision taken: Reorder quantity set to 4200 kits and reorder point set to 3000 kits.
Rationale: The economic order quantity was found to be equal to around 20000 kits,
with $ 1000 as the reorder cost and an average of 10% cost as inventory holding cost,
but we set the reorder quantity to 4200 kits and reorder point as 3000 kits. This was
done with an objective to save money for purchasing a machine at station 3, where
utilization was frequently observed to be equal to 100%. The reorder point was set to
3000 kits as we observed the average daily consumption to be equal to 720 kits and
since there was a lead time of 4 days, the reorder point of 3000 kits ensured that stock
out did not occur.
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Impact: The cash reserves increased due to this step.

6. Decision taken: Machine was purchased at station 3 and contract level was changed to
C3.
Rationale: Once enough cash was accumulated to purchase a machine at station 3, a
machine was duly purchased which caused the average lead time to drop to less than
0.5 days and then to obtain higher revenues, contract level was changed to C3.
Impact: The cash reserves increased at a faster rate.
7. Decision taken: Increasing reorder quantity to 7200 kits.
Rationale: Once cash reserves were stabilized, reorder quantity was set to 7200 kits
so as to reduce costs.
Impact: The costs for placing an order were reduced.
8. Decision taken: Changing the lot size to 2 lots per order, with lot size of 30 kits.
Rationale: Even after purchasing a machine at station 3, it was observed that when
the number of jobs arriving at any day was more than 15, some portion of revenue
was lost even when the average lead time was less than 0.5 days. To resolve this
situation, we changed the lost size to 2 lots per order, as it would lead to decreasing
the lead time of the jobs.
Impact: The amount of revenues which were lost otherwise reduced i.e. we were able
to obtain higher revenues. Still some revenue was lost when the demand was higher
than 18 jobs which was very rare.
9. Decision taken: Increasing reorder quantity to 19800 kits
Rationale: Once cash reserves were stabilized, reorder quantity was set to economic
order quantity i.e. 19800 kits so as to reduce costs.
Impact: The costs for placing an order were reduced.
Exit Strategy
As the demand was fairly stable, we calculated the total number of kits required for the last
100 days to be equal to 75000 kits i.e. 72000 kits with average of 720 kits per day and 3000
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kits as safety stock to cater to any sudden rise in the demand. Also we changed the reorder
quantity to 1000 kits and reorder point to 1800 kits to cater to the situation of stock out. With
this decision, we were left with an inventory of around 8000 kits at the end of the simulation.
What went Right and What went Wrong?
The decision marked as number 1 above was a wrong move, as the configuration of machines
was not capable of handling the fluctuations in demand. Rest of the decisions made were
reactionary steps. Decisions to purchase machines at station 1 and station 3 were right as lead
time was reduced to less than 0.5 days. Another machine at station 1 could have been
purchased to increase average revenues even further. The exit strategy that was used could
have been a little different as at the end an inventory of 8000 kits was left out.
Key Learnings
1. It takes at least a few days to observe the effects in the outputs due to any changes
made to an already existing configuration.
2.

Bull whip effect: A small change made at some level in the configuration changes the
output to a great extent.

3. Impact of bottlenecks to the outputs of the system.

4. Impact of unstable demand on the output of system.