Littlefield Technologies

Case Study II

 Littlefield Technologies

 Saif Khan

4256178

Littlefield Technologies is a Digital Satellite Systems (DSS) receivers producing company. LT sells their receivers to vendors like small manufacturing companies. Companies like LT generally have their production time for 360 days and then tend to retire after that. They stop the manufacturing, and get rid of any remaining inventory by disposing them off. The capacity and the inventory has no value after the factory shuts down and that’s why LT gets rid if their remaining and prefer not selling them.

LT receives their raw materials in forms of kits, at $10 each. Their supplier delivers the kits in the exact quantity and 2 weeks after their order is placed. Placing an order costs $1,000 plus the cost of each kit (in batches of 10).

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LT takes the raw materials, assembles them, and puts the finished assembly through 4 step testing process (on 3 different machines). The cost of each machine is shown in the figure above. If can cost LT $10,000 if any of the machines  stopped working before the retirement period of 360 days

Littlefield has three contracts to offer. The pricing is for a set of 10 DSS receivers.

1. Price = $200, Lead Time = 7 days, Max Lead Time = 14 days
2. Price = $225, Lead Time = 1 day, Max Lead Time = 7 days
3. Price = $250, Lead Time = 0.25 days, Max Lead Time = 1 day

The factory’s been operating from 30 days, and during the next 330 days you (the operations team) have to manage the factory’s capacity. Your responsibilities over the next 360 days including the following:

• Suggest Lead Times
• Changing testing schedules (FIFO is the current scheduled)
• Manage inventory by setting policies
• Upgrade the machinery

 All of these aim to maximize the cash position

With the information we read the study suggests the ready to play a game towards profit maximization by answering these questions.

1. What are the best Lead Times (Min & Max)
2. Determine the bottlenecks if any
3. How many machines at each station are required?
4. Are the machines running at capacity?
5. How many batches per day can be made to make these deliveries?
6. Should the contract prices be changed?
7. What is the reorder point?
8. Reorder quantity?
9. What is the inventory holding costs?
10. What is the average daily demand?
11. Check the overall standard team by pushing the overall standard button?

The core component to keep in mind to make any decision first is to have a strategy and with good decisions and accurate calculations first step, as it is not the trial and error.