Group-2

Himanshu Agrawal P16002

Ayswaria C (P16010)
Manyam Venkata Vamsi (P16032)
Vinay Nair (P16039)
Tamal Samantha (P16048)

LIITLEFIELD SIMULATION
GAME
Report by Group-2
After the initial 50 days of simulation, the factory is handed over to the team. At this stage, it
is running in Contract-1 of $750. Immediately after receiving the control, we studied the
demand patterns to understand what the mean demand is over a certain period of time. This
is essential to calculate the reorder point as we have to maintain the inventory enough for
lead time.

Calculations revealed that the average demand during any period over 10 days is not crossing
15 kits. However we didnt use this a hard and fast rule. During the entire game we
maintained a steady watch on the demand patterns and studied what is happening during the
demand cycles. As the demands are very uncertain, we tried to identify the patterns in the
demand. With further learnings during the game, we changed the reorder quantities and the
Inventory order quantity which will be explained in this report.

After receiving the control, with the idea of progressing to higher contracts as quickly as
possible, we planned to buy machines. For this we calculated the average quantity of queue
formation. We identified that during the first 50 days, the average queue formation at
machine-3 almost double compared to other machines and also the peak queues formed at
machine-3 are pretty high compared to other machines. After doing these calculations, we
decided to buy machine-3 first so that we can reduce the lead time.

After buying the new machine, we briefly examined the lead times and then accepted
contract-2. As the cash quantity is very less after buying thee machine, we ordered inventory
which is lesser than EOQ and gradually increased it as raised more cash. After this, the next
step is to analyse the lead times and machine queues so that we can progress to contract-3.

In this step we studied the utilization patterns of the machines to understand where there is
the maximum requirement for the machines. The utilization patterns revealed that there is
maximum utilization at step-1. So we decided to buy machine-1. During these days we didnt
test any of the different options available at machine-1 and machine-2. We stick with de facto
settings as the lead times are within the limits. After buying the machine-1, lead time started
to hover around 0.55-0.65 but never went below 0.5.

Here, we are stuck a bit as we are not clear why the lead times didnt go to minimum. We
studied the machine utilization patterns, queues at the machine and the total lead times. Most
of the times, machine utilizations are about 80% and sometimes only machine-2 used to show
above 95 percent utilization.
We calculated the total lead times using the below the excel table and decided to buy
machine-2. After buying this machine, lead time reduced to less than but the average revenue
per kit is still hovering around $1250 and not able to earn complete money. We started to try
different options as another machine is not required because utilization of rates of all
machines is less than 80%. We tried the 2*30 lot size option and as the lots will be coming
more frequently, we changed the option in machines-2 to priority to step-2, which is giving
importance to lots coming from machine-1. This step gave the required result, as we are able
to consistently earn $1300 per order with only losing some amount occasionally.

Final Stage:

After accepting Contract-3 of $1300, we will lose the control on day 386. We planned to
change the inventory order quantity such that we will place the final order on day 384 or 385
which will be enough for the next hundred days. By planning this way, we wont lose the
reorder point quantity which costs around $30000-40000. But because of the uncertain
demand, the next order in the final stage appears to happen on 387 th day. So increased the re-
order point and ordered the inventory which will be enough for the rest of simulation.

To calculate the quantity for the 100 days, we used the moving averages method. We
downloaded the demand for 340 days and calculated moving averages for the 100 days. The
mean of the 100 days moving average comes to be around 14.6 units per day with a standard
deviation of 0.16. The values of moving averages varied from 14.2-15.2 units per day. By
observing the plots, we found that most of the demand lied below 14.9 units per day. We
calculated the present inventory along the quantity present in ROP. After this, we determined
that we need an inventory for 96 days. We ordered this quantity and changed the ROP and
order quantity to zero. This turned out to be a good move as we lost only 22 jobs or 1320 kits.

Difference in strategy from Winning team (5G)

5G bought the machines as soon as the cash was available for purchase. We lagged behind in
buying the machine as we were trying to figure out which machine we should buy first. 5G
were switching between $750 contract and $1300 initially to gain the maximum revenue.
Initially we were under the impression that even if we are meeting the maximum lead time
we will be able to generate full revenues. But, later we realized that units should be supplied
in quoted lead time to earn the full revenues. We corrected it later and were able to generate
full revenues for the selected contract. Rest other things were similar to 5G except for the
step 2 priority at machine-2. 5G used FIFO for machine 2 and we gave priority to step-2 as
station 2 was catering to 2 steps, step-2 and step-4.

Learnings from the Game

In the starts we kept re-order point very low because of which we were not able to
meet the demand during lead time. We learned the importance of reorder point and
how it can be used to cater for the variable demand during lead time.
We also learned about the economic order quantity to be ordered in case demand is
variable. Initially, we kept EOQ low but this increases our ordering cost. Later we
increased the EOQ quantity which reduced the order cost but this increased the cash
held up in inventory. We learned how to optimize the cost between order cost and
inventory carrying cost.
We also calculate the lead time for the units as we had the average demand average
processing time of units. Then using the queueing theory concept, we calculated the
lead time. Calculations are mentioned in appendix following this report.
One group learning from project was attention to details. Initially we thought the job
completion within maximum lead time will generate full revenue, but we were wrong.
We didnt read the instructions properly which led us to commit this mistake.
 Appendix

Calculation of lead time

1 Rough approximation of the machine service rate based on the

) statistics from first 5 days:
Station 1 2 3
Arrival Rate = Th = (jobs per day) 18 18 18
Machines 3 4 3
Utilization of station 70% 63% 60%
Machine service rate = /(m*Utilization) 8.57 7.14 10.0
(jobs per day) 1 3 00

2 Approximation of lead time improvements in optimized plan (via lowest M increase for
) max Lq improvement)
Default Optimized Plan
Station 1 2 3 1 2 3
Arrival Rate = Th = (jobs per day) 14.6 14.6 14.6 14.6 14.6 14.6
Machine service rate (jobs per day), from 8.57 7.14 10.0 8.57 10.00
7.143
step 1 1 3 00 1 0
Machines 2 2 2 3 4 3
7.3 18.0 1.63 0.4 0.18 0.22
Lq (as per Cheat-cheat table) 54 50 0 30 0 0
1.70 2.04 1.46 1.70
2.044 1.460
/ 3 4 0 3
0.50 1.23 0.11 0.02
0.012 0.015
Wait time = Wq = Lq/ (days) 4 6 2 9
0.11 0.14 0.10 0.11
0.140 0.100
Service time = 1/ (days per job) 7 0 0 7
0.62 1.37 0.21 0.14
0.152 0.115
Ws = Wq + 1/ (days) 0 6 2 6
Lead Time = Total Ws = Ws1+2*Ws2+Ws3
3.585 0.566
(days)