LittlefieldGameReport

LittlefieldGameReport - Yayteam: Nina Madison, Zizhen Wang,...

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Yayteam: Nina Madison, Zizhen Wang, Shen-Shen Wu Littlefield Labs - Capacity Management Our objective for Round 1 of the Littlefield Game was to generate a net profit by the end of the game . Profit equates to cost ($600 per job) subtracted from revenue ($1000 per job plus interest accrued on the cash balance). Since the cost was fixed, we were concerned only with the revenue side of the equation. A lead time no longer than 1.0 days generated the maximum revenue of $1000, but we were also satisfied with lead times of less than 1.6 days, which is the break-even point when the job generates only $600 in revenue. Considering these elements and the variability of demand, we decided on a conservative strategy: maintain a high cash balance to accrue as much interest as possible and buy additional machines only when they are necessary to increase capacity and keep lead times under 1.6 days. Before the game began, we evaluated all of the data from the first 50 simulated days, paying close attention to the utilization rates of the stations in order to determine the first bottleneck. Although we determined that the initial bottleneck was station 1, we decided not to purchase an additional machine right away because we wanted to keep generating interest on the unused money. In more concrete terms, the $90,000 that machine 1 costs would have generated $6,856 in interest 1 , and since the machine can be re-sold for $10,000, the machine needed to generate an incremental lifetime revenue of $86,856 in order to be cost effective. Therefore,
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LittlefieldGameReport - Yayteam: Nina Madison, Zizhen Wang,...

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