Group 7B

OM II Assignment
LITTLEFIELD TECHNOLOGIES
A report submitted to

Prof. Subhamoy Ganguly

On

23/01/2014
By

Group 7B
Aparna Sagar/ Mayank Sengar/ Preeti Kumari/ Rajeev Ranjan/ Vaibhav Arora

Indian Institute of Management Udaipur

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Group 7B

Littlefield Technologies Our Gameplay

Initial Game Strategy: The team met, the day before the game was about to start, to prepare a strategy
based on the learning that we had while playing the demo version of the game. We had realized that the
machines in Station 1 and Station 3 were operating at full capacity (i.e.100% utilization) when the
demand was high. As a result, inventories were queuing up right before these two stations. We thought
of buying both the machines but due to cash constraints we could afford to buy only one. We decided
that our first move would be to buy a Station 1 machine. We decided that we would look at the lead
time and then decide which one of the three contracts we should opt for. We also discussed the safety
stock level that should be kept and the amount of quantity to be ordered (i.e. reorder quantity). Since
the lead time of supplier was 4 days we decided that based on the average number of jobs we would
keep the safety stock value.
The Strategy and the Steps Carried out:
Step 1: On Day 61 we bought the machine of Station 1 with $90,000. We saw that we were getting a
lead time of about 2.3 days hence we chose Contract 1, in which we would receive $750 for completing
the orders in minimum 7 days and maximum 14 days. We also saw that we were getting an average of
15 jobs per day i.e. we had to supply (15 X 60 =) 900 quantities per days. Hence team came to a
conclusion that the re-order point be kept (900X4=) 3600. We had 7620 amount of inventory so we kept
the re-order quantity at 3000 so that the inventory level comes down.
After taking this step, we saw that the lead time had come down to 1.98 days on Day 65 so we
change the customer contract to Contract 2, in which we would get $1000 by completing the contract in
minimum 1 day and maximum 2 days.
Step 2: On Day 75 we saw that the lead time was around 0.4 days due to the fall in average job from 15
to 8, hence we changed the customer contract to Contract 3, in which we would get $1250 by
completing the order in minimum 0.5 days and maximum 1 day. We also changed the re-order point to
1800 as the average job arrival per day had decreased. The capacity utilization of Station 3 was high but
we did not have sufficient cash to buy the machine of Station 3. On Day 81 cash in hand was $1, 24,000
so we bought the Station 3 machine. At that time most of our stocked inventory had replenished so we
increased the re-order quantity to 4200.
Step 3: On Day 108 we saw that between the Day 81 and Day 108 there were several occasions when
we had not been able to deliver the quantities in the promised time and so the revenues received in this
period was much less than what we should have received. On several other occasions our inventory had
completely replenished and we had not able to deliver the ordered quantity to the customers due to
which we got zero revenues. The lead time had escalated to around 1.8 days due the increase in the
average job arrivals to 14. Hence we changed the customer contract to Contract 2 i.e $ 1000 per job
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Group 7B
contract with maximum delivery time of two days. We also changed the lots per size from 60 X 1 to 30 X
2 to find out how that affects the production line. We also changed the re-order point to 3000 and the
re-order quantity to 7200 as the average job arrival had increased. We regret not monitoring the game
in that period. Due to our negligence we suffered losses.
Step 4: On day 109 we changed the reorder point from 3000 to 3600 as number of job arrivals had
increased and we did not sufficient inventory in stock. At that time our objective was to increase the
inventory level so that we can fulfill the demand of customer. Also at that time we did not have
sufficient cash to purchase more inventories. On day 108 had $ 6000 cash in hand. So by changing
reorder point to 3600, we were accumulating inventory to meet the unexpected demand of the
customer. Also we changed the customer contract to Contract 1 so that we do not lose further revenue
due to not being able to deliver in time. We found that there was large job queue at Station 3, so we
changed the scheduling policy from FIFO to Priority 4 to give priority to step four so that we can
decrease the job waiting from the station 3.
Step 5: On day 111 changed reorder quantity from 7200 to 2400 due to unavailability of cash to
purchase high quantity. On Day 112 we have only $3000 cash in hand. Due to lack of fund we were not
able to keep enough inventories. We had zero inventories at that time and we were not able to fulfill the
customers demand. On Day 113 we saw that we have had $14,000 in hand so we increased the re order
quantity to 7200. The lead time was 1.8 days so we changed the customer contract to Contract 2. We
couldnt understand the change that was happening due to lost per order so we changed it back to the
initial 60 X 1. We also found that the change in scheduling rule resulted in the increase in the lead time
so we changed it back to FIFO. On day 114 we saw that the lead time was 1.77 days still we changed the
customer contract to Contract 3 in anticipating that the demand will fall and that we would be able to
fulfill the demand.
Step 6: By now we had some what realized what was happening in the game and the various setting that
we had done had streamlined. The customer orders had fallen just like we had anticipated and we were
able to deliver the products in time. Thereafter all we did was, monitor the job arrivals and change the
re-order point and re-order quantity. On Day 124 we saw that the queue before Station 2 was on a rise,
the capacity utilization of Station 3 was moderate and utilization of Station 1 was high. This made us
realize that more number of jobs was coming from Station 1 so we changed the scheduling rule at
Station 2 to Priority 2. On Day 245 we saw that the capacity utilization of Station 1 was 100% and the
lead time was increasing so we bought another machine of Station 1.
Step 7: All we had to do now in change the re-order quantity and the re-order point based on the job
arrivals. On Day 386 we thought that the game has ended (as we had forgotten that after the end of Day
386 the game would be simulated for another 100 days) so we sold all the machines that we had
purchased while playing the game. This was a big mistake and it brought us down from rank 6 to rank
14.

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Group 7B

Our Learning:
1. Reorder Quantity: We learnt the concept of economic order of quantity when demand is
random or unpredictable. Through EOQ we can meet the demand as well as can prevent
overstocking. We also realized that due to lack of funds can be a major issue in a real life scenario
and to avoid such a situation a proper planning is required. We also applied newsvendor model to
calculate the reorder quantity in order to maximize the expected profit.
2. Reorder Point: This game also taught us at what level of inventory we should order for next
delivery of raw materials. We had adjusted this several times based on the average number of job
arrivals and inventories in stock. We also learnt that we must keep some safety stock to meet the
unpredictable demand in future. Inventory that remains after meeting the demand in duration of
lead times is known as safety stock.
3. Machine in various stations: As the retirement price of machine was very less than purchase
price so we had to make wise decision whether to purchase it or not. We came know the concept
of utilization and were able to identify the bottleneck in the whole process. Machine having
utilization above 100 % was the bottleneck in the process so we bought those machines which
were bottleneck in the process. As the utilization went above 100%, jobs started queuing up and
increasing the lead time. So we should effectively plan to avoid queuing up.
4. Sequencing of queue: According to the length of queue at various stations we learnt to use
scheduling policy to give priority to step four or two or follow FIFO order to accomplish maximum
number of jobs.
5. Customer Contracts: As we have three contracts and each contract had different rules and
agreement we had to choose which contract to go for. Larger the revenue, shorter was the delivery
time and larger the penalties of not being able to deliver in time. It taught us to manage the lead
time. To manage the lead time we had to manage all things like capacity, inventory, lot size and
other parameters.
Our Experience: It was a great experience playing the game. We got a feel of how difficult the job of a
production manager is. On one side we have the uncertain demand which if not forecasted well can
result in high inventory level or falling short of delivering the orders in time. And on the other hand
there is a decision to be made as to how much to order and what level to keep the safety stock at. In this
particular game there were no inventory holding cost nor was there a change in the lead time of the
supplier (which was fixated at 4 days). If these two situations were incorporated into the game, like it
was in the Beer Game, the complexity of the game would have multi-folded. But that is how the actual
scenario would be like. Through this game we got an idea of the following concepts: process analysis,
capacity management, demand forecasting, production control, queuing and lead time management. All
in all this was a great learning experience for all of us.

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