Littlefield Technologies (LT) has developed another DSS product. This new model is manufactured using the same process as your previous assignment "Capacity Management at Littlefield Technologies"  neither the process sequence nor process time distributions have changed.

Daily customer demand continues to be random, but this time there is no trend. Expected demand remains stable during the entire product life span. Marketing knows demand will end abruptly on Day 268 when a new model is released. LT will again: cease production, retool, and dispose of the obsolete inventory.

Marketing discovered that customers would pay higher prices for shorter lead time contracts. LT has been reluctant to quote shorter lead times because current averages have been running longer than they would like. They are wondering if you might be able to shorten lead times and increase marginal revenues.

LT has once again retained your services on Day 50. Management trusts you will effectively manage inventory, purchase additional capacity, and switch the scheduling rule to maximize their final cash position on Day 268.

You are now able to manage LT's raw materials replenishment. The factory began operations with 9600 kits. Kits are purchased in multiples of 60 because orders arrive in batches of 60. They cost $10 per kit with a fixed cost of $1000 per inventory shipment, independent of quantity. Inventory is automatically requisitioned whenever all three of the following criteria are met: (1) the raw kit inventory level is less than the reorder point, (2) there are no inventory orders in transit, and (3) LT has enough cash to purchase the order quantity. Materials arrive exactly 4 days later. An order quantity set to zero will prevent further inventory orders. The reorder point and reorder quantity can be changed by clicking Edit Data on the Materials Buffer icon.

Physical costs of holding inventory are negligible, and can be ignored, but the financial cost of holding inventory should be considered.

Customers are willing to pay premium prices for faster lead times. You now have three contracts to choose from:

• $750 with quoted lead time = 7 days, and maximum lead time = 14 days. (this is the initial contract).
• $1000 with quoted lead time = 1 day, and maximum lead time = 3 days.
• $1250 with quoted lead time = 12 hours, and maximum lead time = 24 hours.

If an order's lead time exceeds the quoted time, then the revenue for that order decreases linearlyfalling from the quoted price to zero once the maximum lead time is surpassed. Lead time contracts are assigned upon arrival. They cannot be changed for work already in process. Contracts for arriving orders can be offered by clicking Edit Data under the Customer Order icon.

LT begins with $1,000,000. Cash held earns interest (compounded every simulated day) at an effective annual rate of 10%.

50 days historic data are available for review before the assignment begins. The simulation will run at the fixed rate of one simulated day per real hour over seven real days. Your assignment window closes at the dawning of Day 218. An additional 50 simulated days will be quickly run without further input. Results remain available for review after the simulation has ended.

Deliverables

Your team will turn in a concise summary of the decisions made during the week you had access to the factory, why you made them, and in retrospect whether you think it was your best course of action. Describe how concepts learned in class can be applied to better manage LTs factory, show analysis to justify conclusions.