littlefield 2

littlefield 2 - Stanford University Graduate School of...

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Stanford University Graduate School of Business January 2008 Based on a note written by Sam Wood and Sunil Kumar, Stanford University Graduate School of Business. Copyright 2007. For permission to reproduce, contact info@responsive.net. Managing Customer Responsiveness at Littlefield Labs Background Littlefield Laboratories (LL) has opened another lab. The new lab uses the same process as the lab in the assignment “Capacity Management at Littlefield Labs” — neither the pro- cess sequence nor the process time distributions at each machine have changed. On day 0, the lab began operations with three preparers, one tester, and one centrifuge, and an inven- tory of 160 test kits. This left the lab with $1,000,000 in reserves. Customer demand con- tinues to be random, but the long-run average demand will not change over the product’s 268-day lifetime. At the end of this lifetime, demand will end abruptly and lab operations will be terminated. At this point, all capacity and remaining inventory will be useless, and thus have no value. Management would like to charge the higher prices that customers would pay for dramati- cally shorter lead times. However, historic lead times often extend into several days, so management has been unwilling to quote the shorter lead times. Operations Policies at Littlefield
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This note was uploaded on 12/18/2009 for the course BUAD 311 at USC.

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littlefield 2 - Stanford University Graduate School of...

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