BackgroundIn early January.
Littlefield Labs ( LL ) opened its first and merely extremely automated lab to prove blood samples. LL receives the samples from local infirmaries and clinics and processes the samples utilizing disposable kits.After 360 yearss of operation the lab will discontinue operations. close down. and dispose of any staying kit stock lists. Neither capacity nor stock list has a salvage value after the lab shuts down. Selling has sketched the expected demand tendency shown in Figure 1. Figure 1Although selling is confident of the unsmooth form of demand.
there is non adequate selling informations to foretell the existent extremum demand at this point. It will depend on how fast demand starts turning after twenty-four hours 60.Management’s chief concern is pull offing the capacity of the lab in response to the complex demand form predicted. Delaies ensuing from deficient capacity would sabotage LL’s promised lead times and finally force LL turn away orders.Based on an assignment written by Sunil Kumar and Samuel C.
Wood. Stanford University Graduate School of Business. Copyright 2009.
No portion of this papers may be reproduced without permission from Responsive Learning Technologies. Inc. [ email protected ]Operationss at Littlefield LabsLittlefield Labs uses one kit per blood sample and disposes of the kit after the processing of the sample is completed After fiting the sample to a kit. LL so processes the sample on a four measure procedure on three machines as shown in Figure 2. Figure 2OUTInchMeasure 1Sample Fixing$ 25. 000 per machineMeasure 2 & A ; 4Testing$ 75. 000 per machineMeasure 3Centrifuging$ 75. 000 per machineThe purchase monetary value of each machine is shown above every bit good.
The retirement monetary value of each machine is $ 10. 000 if the machine is retired before twenty-four hours 360. Although direction has non performed any stopwatch surveies of the four different procedure stairss. it knows there is virtually no variableness in a given step’s procedure clip from occupation to occupation. Earlier stairss are longer than subsequently stairss. so Step 1 is longer than Step 2.
which is longer than Step 3. Step 4 is the shortest measure.One natural kit costs $ 100. A dependable provider delivers precisely the order measure of batches.
two hebdomads after the order is placed and paid for. Puting an order costs $ 1000 plus the cost of the kits. Management considers physical cost of keeping stock list negligible compared to the chance cost of lost involvement on money sunk in stock list. The involvement is 10 % per twelvemonth. compounded daily.
LL uses a Reorder Point / Order Quantity raw material purchase policy. That is. natural kits are purchased every bit shortly as the undermentioned three standards are all met: ( 1 ) the stock list of natural kits is less than the reorder point. ( 2 ) there are no orders for natural kits presently outstanding. and ( 3 ) the lab has sufficient hard currency to buy the reorder measure. No order is placed if any of these three standards are non met. So. for illustration.
a squad could forestall orders from being placed at all by puting the order measure so high that there is deficient hard currency to put an order.Customers are willing to pay a premium for fast lead times. and you now have three pricing contracts to take from. The monetary value is per sample.monetary value = $ 200 ; quoted lead clip = 7 yearss ; maximal lead clip = 14 yearss. ( This is the contract that the lab starts with. )monetary value = $ 225 ; quoted lead clip = 1 twenty-four hours ; maximal lead clip = 7 yearss.
monetary value = $ 250 ; quoted lead clip = 0. 25 yearss ; maximal lead clip = 1 twenty-four hours.Pull offing a Short Product Life Cycle at Littlefield LabsIf an order’s lead clip exceeds the quoted lead clip. so the gross for that order decreases linearly from the monetary values above for the quoted lead clip to $ 0 at the maximal lead clip. A contract is assigned to an order every bit shortly as it arrives at the lab. and that order’s contract can non be changed later.
AssignmentIt is now early February and LL has installed a high-octane wellness operations direction squad ( you ) to pull off the lab’s capacity. For the following 330 fake yearss you must purchase or sell machines. put stock list policies.
and quote lead times to maximise the lab’s overall hard currency place. Currently there is one preparer. one examiner. and one extractor.
You may besides alter the manner testing is scheduled. Presently occupations at the examiner are scheduled First-In-First-Out ( FIFO ) . but you can give precedence position either to the long initial trial or the short concluding trial.There are 30 yearss of history available for your reappraisal.
stand foring the period from early January to late February. Once the assignment begins. the simulator will run at a rate of 3 fake yearss per 1 existent minute for the following 110 proceedingss. Therefore. there will be a sum of 360 yearss of simulation matching to a lab life clip of a twelvemonth. The winning squad is the 1 with the most hard currency at the terminal of the game.Pull offing a Short Product Life Cycle at Littlefield LabsIcons on the Littlefield Technologies web page:IconOrder Queues:Information AVAILABLE• Number of new client orders by twenty-four hours• Average figure of orders waiting for kits by twenty-four hours• Current pricing contract for geting orders• Lot sizeMaterials Buffer:• Average figure of kits ( natural stuffs ) in the buffer by twenty-four hoursStation Queues:• Average figure of receiving systems in procedure waiting while all the machines in the station are busy. by twenty-four hoursStations:• Number of machines in each station• Scheduling Policy used ( for examiner merely )• Historical use of the station by twenty-four hours ( i.
e. . the mean fraction of clip a machine was busy at that station during that twenty-four hours ) Completed Jobs:• Numbers of orders completed by twenty-four hours ( by pricing contract )• Average order lead clip by twenty-four hours ( by pricing contract )• Average gross per order by twenty-four hours ( by pricing contract )Snaping on the above icons will besides enable you to alter certain characteristics of the mill such as the figure of machines in a station.Beginnings and utilizations of hard currency can be obtained by snaping on the hard currency button on the web page. Beginnings of hard currency are gross. money raised from the sale of machines. and involvement.
Uses of hard currency are natural stuff ( kit ) purchases and the purchase of extra machines. Finally. you can look into the overall standing of your squad utilizing the overall standing button.