Littlefield_Game_2_Report

# Littlefield_Game_2_Report - Elisa Purnamasari Sejoong Kim...

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Elisa Purnamasari Sejoong Kim Stephanie Sinugroho Stephanie Wijanarko Littlefield Game 2 Report In the second Littlefield game, the process remains the same with four stages and 3 machines. The differences in this game are that we have control of the reorder point, EOQ and also the pricing contract. There are three different pricing contracts: Contract 1: price = \$750; quoted lead time = 7 days; maximum lead time = 14 days. Contract 2: price = \$1000; quoted lead time = 1 day; maximum lead time = 3 days. Contract 3: price = \$1250; quoted lead time = 0.5 days; maximum lead time = 1 day. At the beginning, the game started with two machine 1, three machine 2, and two machine 3; reorder point is 24 and EOQ is 120 units and we were waiting for the inventory to come within 1-2 simulative days. The company is using Contract 1. The objective of the second game is to maximize the cash on hand by changing these variables: EOQ & reorder point, number of machine required, and pricing contract. First, we calculate the EOQ and the reorder point. EOQ calculation: D = annual demand = average daily demand × total working days = 15.5 × 268 = 4,154 S = setup cost = \$1,000/order H = holding cost (interest) = 10% × \$600 = \$60 unit/year EOQ = 2DS/H = (2 × 4154 ×1000) / 60 = 372 units Reorder point calculation: d = average daily demand = 15.5 units L = lead time = 4 days z = 1.64 (90% satisfaction level) σ = L × SD = 4 ×4.16 = 8.32 Reorder point = dL + zσ = 15.5(4) + 1.64(8.32) = 75 units Second, we calculate the capacity for the three machines. For the calculation, we only use the

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## This note was uploaded on 02/01/2011 for the course BUAD 311 taught by Professor Vaitsos during the Fall '07 term at USC.

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Littlefield_Game_2_Report - Elisa Purnamasari Sejoong Kim...

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