SAMPLE1-2 ug - Stanford University Graduate School of...

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Stanford University Graduate School of Business rev. Oct 2008 This note was written by Samuel C. Wood and Sunil Kumar, assistant professors at the Stanford University Graduate School of Business Capacity Management at Littlefield Technologies Background In early January, 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 pre- mium and competes by promising to ship a receiver within 24 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 268 days of operation, the plant will cease producing the DSS receiver, retool the factory, and sell any remaining inventories. In the initial months, demand is expected to grow at a roughly linear rate, stabilizing after about 5 months. After
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