Top-Rated Free Essay
Preview

Littlefield Technology

Good Essays
1057 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Littlefield Technology
Littlefield Technologies Game 2 Strategy – Group 28
1. CUSTOMER ORDERS AND ORDERS WAITING FOR MATERIAL: When considering the demand level and changes, we would configure a time series of that data using short range forecasting. Time series are important because they are often the drivers of decision models. Trend projection and regression analysis models will be used to forecast the future demand as the growth of the demand increases at a lower level, increases to a higher level, and then decreases over the course of the project. The following equation applies to this analysis:
Regression Analysis ŷ = a + bx

After using the first 50 days to determine the demand for the remainder of the project, we can then determine the average daily demand for raw material kits by dividing the total of the forecasted demand by the life of the project (365 days). This calculation will give us the average number of daily orders and thus the average number of raw material kits needed, assuming the ratio of 1:1 between receivers and raw material kits remains constant. The calculation can be expressed as:
Average daily demand for raw material kits =
∑demand
n
As the demand for orders increases, the reorder point and reorder quantity will also need to be increased. As the demand for orders decreases, the reorder point and reorder quantity will need to be adjusted accordingly. To estimate the standard deviation of demand, the following formula would be used:

Where x is the value of demand and is the daily average value of demand, and N is the number of days in the project. The standard deviation will show how accurate the demand for the project was forecasted. A high standard deviation signals inaccurate data, while a low standard deviation indicates fairly reliable data. To estimate the standard deviation of lead time, the following formula is used: бdLT = √[(Average lead time x б2d) + (Average daily demand)2б2LT]
This calculation is assuming the average lead time will remain at a constant rate of 4 days. In order to estimate the required safety stock, the following equation would be applied, and the reorder point can be found as:

Safety Stock = ΖбdLT
ROP = Expected demand during lead time + Safety Stock
A higher demand and lead time would require a higher safety stock, leading to a higher reorder point, in order to conserve reliability and resources. This situation would also be true vice versa if the demand was low. At the beginning of the game, the reorder point will automatically be set to 2000 kits when the demand is low, and will be increased as demand increases. We will calculate safety stock using varying service levels (90%, 91%, 92%, etc.) in order to predict and illustrate multiple reorder point outcomes.
2. INVENTORY ORDERING AND HOLDING COST: Ordering costs include costs of supplies, forms, order processing, purchasing, and clerical support. As the orders are being manufactured, setup costs are produced. There are also holding costs to consider which include the costs associated with carrying the inventory over time.
For the Littlefield Technologies situation, the total of these costs would also include production: TC = (D/Q)S + (Q/2)H + PD
Total cost can be used as a factor in determining the reorder quantity. The reorder quantity must be high enough to satisfy the demand requirements, but low enough to efficiently conserve the cash balance. We can use the EOQ Model to minimize the total of ordering and holding costs, found as:
EOQ = Q = √(2DS/H)
This would give us the optimal order size. As the quantity ordered increases, the total number of orders place per year will decrease. Thus, as the quantity ordered increases, the annual setup or ordering cost will decrease. But as the order quantity increases, the holding costs will increase due to the larger average inventories that are maintained. If the demand doubles during the year, and all else remains constant the reorder quantity should be increased by 41%.
3. RAW MATERIALS IN BUFFER: Raw material buffer are goods held at the end of a process to protect the company in the event of an abrupt increase in demand that exceeds a short-term production capacity. Safety stock is an extra stock of inventory held to allow for uneven demand. The difference between the two is that buffer stock protects your consumers in the event of an abrupt demand change while safety stock protects the company itself from incapacity in processes and supply chains. The buffer must be high enough to cover the company’s extra inventory requirements in the event of an abrupt change in demand, while also being low enough to utilize monetary resources effectively.
4. OUTSTANDING ORDERS FOR MATERIAL: To keep the company from using their buffer stock and to keep the number of raw kits outstanding low in the process, the

reorder point (ROP) must be at a value that re-orders inventory at the right period of time while also keeping the cost of inventory at a lower level. We also have to take into consideration the lead time of 4 days. If the ROP is not set at the correct value, the lead time will delay the production of raw kits and increase the number of orders outstanding.
5. PROJECT MANAGEMENT: We can apply multiple project management concepts to planning the project, scheduling the project, and controlling the project. First, the project was planned and scheduled by setting a goal of completion. Our goal was to have the strategy and Excel document completed by Tuesday, November 15th. Using a work break-down structure, one team member worked on the description of the game strategy while the other group members divided the work of the Excel spreadsheet. We communicated these ideas by first collaborating with all group members through email, deciding where to meet up, and working on the project together in a classroom setting. This is a prime example of a positive group experience, as our actions within the group are well communicated and each group member’s ideas are considered thoughtfully. Compared to Phase I of the game strategy, we quickly knew how to break-up the project into a basic and common understanding. To improve this group experience, more time would need to be allotted to completing the project before the expected due date, as to reduce stress and confusion.

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Eco/365 Week 2 Assignment

    • 552 Words
    • 3 Pages

    Please include the graph of a movement along the demand curve. Refer to our textbook please.…

    • 552 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Unit 3 Ip Econ 220

    • 697 Words
    • 3 Pages

    Average Total Cost = (Total Variable Cost +Total Fixed Cost) / Units of Output per Day…

    • 697 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Distrigas Corporation

    • 1217 Words
    • 5 Pages

    Filtering days that had excess demand we arrived at 74 days that required the Utility gas company to purchase gas from distrigas. The first phase of that purchase has to be from December 7th to 25th January and the second phase of the purchase should be from 5th February to 28th of February.…

    • 1217 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    (BSOP334 Week 1 Lab Solutions For Faculty) Answers to Lab 1 Chapter 11: Problems 7 and 9 (Pages 504-505) 7. a. No backlogs are allowed | Period | Mar. | Apr. | May | Jun. | July | Aug. | Sep. | Total | | Forecast | 50 | 44 | 55 | 60 | 50 | 40 | 51 | 350 | | Output | | | | | | | | | | Regular | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 280 | | Overtime | 8 | 8 | 8 | 8 | 8 | 3 | 8 | 51 | | Subcontract | 2 | 0 | 3 | 12 | 2 | 0 | 0…

    • 972 Words
    • 4 Pages
    Satisfactory Essays
  • Satisfactory Essays

    A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled.…

    • 1687 Words
    • 12 Pages
    Satisfactory Essays
  • Good Essays

    QAT1 Task 3 309

    • 611 Words
    • 3 Pages

    Step 5: Round up to the nearest Unit to get you final answer. In order to minimize total cost, the order size should be 4560 when company A orders new inventory.…

    • 611 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    econ 2012

    • 375 Words
    • 3 Pages

    Draw and properly label the demand and supply graphs (this means you must label the axes and any lines you include on the graph).…

    • 375 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Operations Managements

    • 2532 Words
    • 11 Pages

    If annual demand is 24,000 units, orders are placed every 0.5 months, and the cost to place an order is $50, what is the annual ordering cost?…

    • 2532 Words
    • 11 Pages
    Good Essays
  • Good Essays

    Activity 9

    • 1533 Words
    • 8 Pages

    option to return the car to any of the four locations and it has allowed Henry and the other agencies access…

    • 1533 Words
    • 8 Pages
    Good Essays
  • Powerful Essays

    Ap Micro Chapter 3 Outline

    • 3143 Words
    • 13 Pages

    A. Demand is a schedule or curve that shows the various amounts of a product that…

    • 3143 Words
    • 13 Pages
    Powerful Essays
  • Good Essays

    Demand is a schedule or curve that reveals the various amounts of a product that consumers…

    • 687 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Demand forecasting: It is an important part of healthcare planning, and can provide results with input to several optimization problems. Forecasting can be done in two ways Qualitative or Quantitative. Quantitative analysis gives better accuracy but good historical data is needed.…

    • 523 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Freedie Mack will need to use moving average date technique. This technique that averages a number of recent values, updated as new values become available (Stevenson, 2012 p. 84). Freedie must use the following equation. Ft=Man= n E i-t At-i/n= At-n…+At-z+At-1/n. By taking amounts from each quarter in the corresponding service areas and dividing the values, Freedie will get the percent’s of growth. The example would be from year one, quarter one, service A and year two using service A quarter one (60/72=1.2% growth projection and then taking the 1.2% and multiplying this by 72). This would give the organization an 86 in service column A for year three, quarter one and so on for each quarter as we will see in the table below. Freedie would use this date to determine the growth or fall regarding the demand. He can use this to predict several years in the future using this technique. Using this technique is easy and easy to understand (Stevenson 2012, p.85).…

    • 679 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Accounting John Hault's Case

    • 2788 Words
    • 12 Pages

    According to historical data, the electricity usage usually tended to be fairly constant from month to month. The company can estimate the revenues for each month, by using historical data. Generally high fluctuation will not occur in electricity usage. We can easily estimate the monthly usage by the data of the same month last year. In this situation, if there is any inaccuracy we can adjust its estimation.…

    • 2788 Words
    • 12 Pages
    Good Essays
  • Powerful Essays

    analyze the current capacity and output levels vis-à-vis the demand as per the forecasts and then…

    • 6643 Words
    • 42 Pages
    Powerful Essays