INDIAN INSTITUTE OF MANAGEMENT BANGALORE
OPERATIONS MANAGEMENT
PGP, Term II, 2019-20
Littlefield Simulation
The Littlefield Simulation game is designed to give students an experience of running a factory
shopfloor by utilizing the various OM concepts that they have learnt: capacity planning,
queueing, inventory planning, etc. Please follow these steps:
a) Review the attached document `Littlefield Technologies: Overview’. Please note that
the data in this sheet is superseded by the data of this assignment note. Nevertheless
the document is a good headsup read.
b) You will play the game as a team: each group as identified by the PGP office will play
as a team. First decide which member of your team will register.
c) Identify a name for your team. Your group name will be visible to all other groups (you
may decide how anonymous you may want to be). Your Username should consist of
lower-case letters only (no punctuation). You must also enter your Section (A, B, C,
etc.) in the Registration Page (it is a single character input).
d) Go to op.responsive.net/lt/iimb/start.html and register your team (use the code
`bangalore’). Please be careful in entering your team name. Do not register multiple
times. We have slots equal to the number of possible teams formed. The team name
cannot be changed.
e) Please note the dates outlined below.
Important Dates:
Date Time Details
21-Oct 10:00 am Open Registration Window
25-Oct 12:00 pm Close Registration Window
1-Nov 10:00 pm Open Game
6-Nov 9:30 pm Start Game (game will last for 4 to 7 days)
Background
Littlefield Technologies (LT) opened its first and only factory to produce its newly developed
Digital Satellite System (DSS) receivers. LT mainly sells to retailers and small manufacturers
using the DSS’s in more complex products. LT charges a premium and competes by promising
to ship a receiver within 72 hours of receiving the order, or the customer will receive a rebate
based on the delay.
The product lifetime of many high-tech electronic products is short, and the DSS receiver is no
exception. After 340 days of operation, the plant will cease producing the DSS receiver, and
retool the factory. Any leftover inventory would be rendered useless with no salvage value.
The folks in Marketing expect demand to grow linearly for just more than 3 months; then
stabilize till the end of the 6th month; and then grow (close to linearly) over the next 3 months
when the next generation DSS product would be announced. This will see the demand on the
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current version linearly reduce towards zero by day 340. Although orders arrive randomly to
LT, the marketing department expects that, on average, demand will follow the trends
outlined above.
On day 0, the factory began operations with three stuffers, one tester, and one tuner, raw
materials inventory of 9600 kits, and with $ 1 million in cash. Customer demand continues to
be random, but the long-run average demand (as outlined above) will not change over the
product’s 340-day lifetime. At the end of this lifetime, demand will end and factory operations
will be terminated. At this point, all machine capacity and remaining inventory will be useless,
and thus have no value.
Management’s main concern is managing the factory in response to the complex demand
pattern predicted. Delays resulting from insufficient capacity would undermine LT’s promised
lead times and ultimately force LT to turn away orders. Further, the Marketing folks have
found that the customers would pay premium prices for dramatically shorter lead times for
servicing orders. Management would like to consider the available options, though historic
lead times often extended into several days.
Assignment
After 50 (simulated) days of operation LT is starting to fear that a few of their receivers may
be delivered after their due dates given the increase in demand. In response, management
has installed a high-powered operations team (your team) to manage the factory’s capacity.
For the next 240 simulated days (i.e. for about 5 days) you will run the factory, and when
departing will leave the factory in such a state that LT maximizes its overall cash position.
Orders for receivers arrive in batches of 60, and currently each order travels through the
factory in one lot of 60 kits. However, you may divide each order of 60 kits into 2 lots of 30
receivers, 3 lots of 20 receivers, 4 lots of 15 receivers, 5 lots of 12 receivers, or 10 lots of 6
receivers. Each lot travels independently through the factory, but the order is not shipped until
all the lots that make up the order are completed. You may change the lot size or contracts
by clicking on the “Customer Order Queue” icon and then clicking on “edit data.”
Currently, the factory has one board stuffing machine, one tester machine, and one tuning
machine. The manufacturing step on each machine consists of a complex combination of
automated and manual tasks such as loading the group of boards and setting up fixtures. Your
shop-floor supervisor has recently completed the following processing time estimates:
Step Station Set-up time (per lot) Operation time (per unit)
1 1 1.4 hours 0.0625 hours
2 2 0 0.025
3 3 1.5 0.002*
4 2 0 0.025
* tuning time is exponential
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In addition, very little variability was observed around the processing times indicated above
for process steps 1, 2 and 4, so that they can be considered deterministic for practical
purposes. Process step 3, which is performed on station 3 (tuning), is more labor-intensive, so
that the corresponding processing times exhibit more variability and their distribution seems
roughly exponential (coefficient of variation equal to 1).
You may buy or sell machines. You can change the number of machines at any station by
clicking on the station and then clicking on “Edit Data” in the menu that pops up (the
respective costs for buying each type of machine is available in the simulation). You may also
change the way testing is scheduled. Currently, jobs at the tester are scheduled on a First-In-
First-Out (FIFO) basis, but you can also give priority status either to the initial tests or the
slightly longer final tests. The lead time for capacity purchase is 3 days. The board stuffing
machine costs $90,000 and you can sell it for $22,500. The tester costs $80,000 and the market
value (when you sell it) is $20,000. Finally the tuning machine costs $100,000 and the selling
price is $ 25,000.
Marketing’s discussions with customers has resulted in three contract options, and LT can
choose from amongst them:
• In the default contract, jobs completed within 3 days earn $750. Late jobs incur a
penalty of $250 per day (prorated by fractions of a day), so that jobs that take longer
than 6 days to complete earn no revenue.
• Jobs completed within 24 hours earn $1000. Late jobs incur a revenue penalty of $500
per day (prorated by fractions of a day), so that jobs that take longer than 3 days to
complete earn no revenue.
• In the fastest lead time contract, jobs completed within 6 hours earn $1500. Late jobs
incur a penalty of $250 per hour (prorated by fractions of an hour), so that jobs that
take longer than 12 hours to complete earn no revenue.
You may change the lot size or contracts by clicking on the “Customer Order Queue” icon and
then clicking on “edit data.” Orders are serviced in the sequence that they arrive, and the
sequence of output cannot be changed.
You will also need to manage the raw materials procurement process, namely set the periodic
review time and the order up-to quantity. Raw kits are purchased from a single supplier and
cost $10 per kit ($600 per order). There is also a fixed cost of $1000 per shipment of raw kits,
independent of the shipment size, and the supplier requires four days to ship any quantity of
raw kits.
The balance on your bank account earns interest (compounded every simulated day) at a
compounded rate of 10% per year. You may also borrow money at a compounded rate
(compounded every simulated day) of 20%. The amount borrowed will cost 5% (processing
fee). In addition any raw material that has arrived and has not gone into processing will incur
an holding cost per raw material kit per day of $ 0.01
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When the assignment begins, there will already be 50 days of history available for your review.
The simulator will run at a rate of 2 simulated (computer) day per 1 real (earth) hour for 5
days. Thereafter the simulation will run the remaining 50 days, for which you will not have
any access to change the parameters. Thus, there will be a total of 340 days, of which you will
be in charge for 240 days. After this simulation is over, you can check the status of your
factory, but the factory will no longer be running.
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