Littlefield Simulation

Analysis Report
Group 03
- Ghanshyam Patel (2110143)
- Kushambi (2110147)
- R S Krithika (2110162)
- Shivam Sharma (2110176)

The LittleField Simulation had three stations and four steps for completion of job order.
There were 3 major decisions to be made
1. Buying machines
2. Buying inventory from supplier
3. Choosing appropriate contract
And 1 minor decision of prioritizing step 2 or step 4.
All of these decisions depended heavily on forecasting future demand with less error rate.
Demand was not stable and increasing the production capacity in the beginning helped us but
being less proactive in buying more machines in the beginning, and henceforth reacting to
demand with contract change has not helped our cause in the end.
Our original strategy was to see the demand trend and take decisions accordingly. On 51st
day, the lead time was 1.79 days which can be covered easily be covered by contract 2. Just
in case to avoid spurious demand spikes and to avoid overutilizing station 1 machine which
was already being completely utilized, so we added a machine at station 1.
Because average demand for first few days were not that high, so we waited till demand
showed some signs of changes, before ordering higher quantity at reorder point.
Before the effect of additional machine could be seen we bought another machine to bring
down the high utilization of station 1. Initially we overestimated interest revenue and
restrained ourselves from spending too much. Due to misjudging demand, we reduced the
reorder point which led us to have no supplies for 2 days.
As the lead time increased too much over few periods, the contract for new jobs were
changed to the intermediate contract with quoted lead time of one day. But it was soon
reverted to the best contract, with quoted time as 0.5 days and maximum time as 1 day, as the
lead time was brought under control.
One of the strategies we thought would help in completing the jobs was the sequential change
over of the scheduling of jobs in station 2. For a period, we changed the scheduling as
priority to step 2, FIFO, priority to step 4, for each day in the simulation. Our logic behind the
decision was to push forward as many new jobs as possible at the beginning, then working on
the jobs as the come, before completing and pushing out orders as quickly as possible. But
only after observing for period, did we see that it wasn’t having much of an influence.

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Seeing that the demand was growing and there were many days before the company
shutdown, we bought a huge quantity inventory, 14400, at reorder point which was also set at
a high point, 7200 compared to the previous reorder point of 1980. We also bought in huge
quantity as there was no holding cost and to save on the ordering cost of 1000 per reorder.
We expected this quantity to run for 48 days before it could completely be depleted. But the
inventory lasted only for 37 hours, more than 11 hours less than our prediction.
As the demand went high during the days 102-110, in order to manage the lead time and get
good revenue, we changed to contract 2. Once the lead time was under control and the
demand had stabilized a little, we changed back to contract 3 again. For similar reasons, the
reorder quantity was also increased to 19200 on Day 113.
As the demand stabilized above 10, we further increased the order quantity to 24000 kits, on
Day 137.
As the queue at station 1 kept increasing and the station was also completely utilized, we
bought another machine on Day 150, to stabilize the condition, which was in turn affecting
the lead time in completion of job.
During days when our lead time was very much under control, we took jobs under contract 3,
as the revenue earned was above 1000, even if there were fluctuations in it here and there,
which was definitely an additional income that came with a risk compared to a definite 1000
in contract 2 with same lead time and better stability.
After triggering the reorder quantity on Day 216, we decided on a reorder point(3600) and a
reorder quantity(6000) for the next 50 days, which was sufficient to manage till the new order
arrived and at the same time would cost as minimal as possible when the company shutdown
at the end of Day 268. And our calculation proved right as the remaining kits at the end of
Day 268 was 3660, which was well under our acceptable range of cost we could pay for the
better position of our company.
Conclusion
After a rough comparison of the decisions taken by the other companies, we understood the
following.
1. Precise calculation or forecast can never be done. All that matters is making
calculations that will have the least error, as the random variation cannot be manually
calculated or forecasted.
2. Careful calculations of reorder points and reorder quantity is very important as many
companies got their reordering triggered during the last few days for higher quantities
compared to the low quantity triggers, we came across.
3. As the simulation was focused on cash in hand, we were not aggressive in buying
machines compared to few other companies. At the end that aggressive thinking also
seemed to have shown some effect making them have lead above us.
Limitation of the Simulation
It was very easy to predict what decisions the other companies were taking with the changes
in cash in hand of the companies, whereas in real life companies, these things are not easily
divulged.

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The demand was fixed for everyone irrespective of the order completion rate and better
performance which is a stark contrast from real life where the demand is affected by the
performance in the current orders. Additionally, since everyone received the same demand, it
was a stalemate unless and until some investment had been made in the form of machines and
inventory, which is again a very different situation from reality.
Graph

Demand Lead Time

Revenue Inventory