Stanford University Graduate School of Business

January 27, 2010

1

An Overview of Littlefield Technologies

Introduction
Littlefield Technologies is an electronics job shop producing Digital Satellite System
receivers. Other manufacturers use these receivers as sub-assemblies of more complex
products. There are several competing companies. Littlefields differentiation strategy
emphasizes guaranteed lead times in return for premium prices. Their guarantee offers
rebates to all customers whose orders are delivered after the quoted lead time, and they
deliver all orders that exceed the maximum lead time for free.
Littlefield assembles DSS receivers from kits of electronic components obtained from a
reliable supplier. The assembly process consists of four steps carried out at three stations
called the board stuffing, testing and tuning stations. A graphic representation of
Littlefields process appears in Figure 1. The first step consists of mounting and soldering
electronic components onto PC boards, at the board stuffing station. The second step
collects test data on each receiver, which is transmitted to tuning for the third step. The
third step tunes the DSS units to receive satellite signals, at the tuning station. The final
step returns boards to the testing station for a final burn-in and certification required by
customers. There is no loss or rework at the Testing station.
Figure1

Based on an overview written by Sunil Kumar and Samuel C. Wood, Stanford University Graduate
School of Business. Copyright 2009. No part of this document may be reproduced without permission
from Responsive Learning Technologies, Inc. info@responsive.net

All stations are composed of fully automated machines, which perform a specific
transformation. Additional machines may be purchased during the assignment. Board
Stuffing machines cost $90,000, testers cost $80,000, and tuning machines cost $100,000.
You may sell excess capacity for $10,000 per machineprovided at least one machine
remains at each station.
New customer orders arrive randomly. Each order is composed of 60 receiver units.
Upon arrival, orders are matched with 60 raw kits of inventory to become a
manufacturing lot. If an order arrives and there is no inventory on hand, that order must
wait in the queue of customer orders needing raw kits. The factory can accommodate no
more than 100 jobs in process and/or waiting at any time. Arriving orders will be turned
away when this limit is reached.
When allowed in the assignment, each order for 60 units may be divided into smaller
manufacturing lots. Processing a manufacturing lot entails both per lot and per unit
process times at Station 1. The remaining steps have no per lot times but management
believes one of the two stations has a random component that also affects process time.
All manufacturing lots must be reassembled into full 60 unit orders before leaving the
factory.
Littlefield uses an automated Reorder Point/Order Quantity inventory replenishment
mechanism. Raw kits are purchased from a single supplier at a cost of $10 per kit ($600
per order) and a fixed ordering cost of $1000 per shipment. The supplier is very reliable,
delivering the exact order quantity precisely four days after receiving payment. Orders
for new inventory are only placed when the following three criteria are in place:
1) the inventory of raw kits is less than the material reorder point
2) there are no orders for raw kits currently outstanding
3) the factory has sufficient cash to purchase the specified order quantity.
When allowed in the assignment, you may change the inventory replenishment
parameters. Reorder points and order quantities are always entered in multiples of 60 raw
kits, which match the order quantity of 60 finished units. This quantity must always be a
whole number greater than zero.
Littlefields lead time pricing contracts quote a promised lead time and a maximum lead
time. Orders filled within the quoted lead time earn full revenue. Orders filled after the
quoted lead time incur penalties. Specifically, the pro-rated revenue for an order
decreases, at a constant rate, from the quoted price to zero once the maximum lead time is
surpassed. All orders taking longer than the maximum time are delivered free of charge.
For example, a contract paying $1,000 per order with a quoted lead time of 24 hours and
a maximum lead time 72 hours is delivered in 30 hours. This orders rebate penalty will
be

...and the order will earn

When allowed in the assignment, you may select the offered contract from a menu of
available contracts. More lucrative contracts will always have shorter quoted lead times
and tighter maximum lead times.
An Overview of Littlefield Technologies

You will have some cash on hand when the assignment begins. This amount is depleted
by both capacity and inventory purchases. Revenues earned from filled orders increase
the cash balance. Cash held earns interest, compounded every simulated day, at an
effective annual rate of 10%. There are no taxes nor fixed overhead costs. To reduce the
possibility of bankruptcy, capacity purchases are not allowed when the resulting cash
balance will prevent the next order of raw materials.

Registering your team

You will need to create and register your team before the simulation begins. Your
instructor will provide a web address, ending /start.html, and the required codeword.
Each team must invent a unique name and password that contains only lower-case letters
or numbersplease no dots, dashes, spaces or other punctuation. A start webpage
illustration appears in Figure 2.
Figure2

On the start page, enter your codeword and click the OK button. On the subsequent page,
enter your teams name and password. After creating the team, you will be able to enter
your teams membership roster. You may use upper case letters in all student names but
please do not include any special characters, hyphenation or apostrophes. If your
instructor has provided a section ID, it is entered in the small field at the top of the page.
Your team is registered once this information is submitted. You may edit the teams
name, password, or membership by returning to your registration page and changing the
appropriate fields. To delete a team, erase all team members and submit an empty team.
You will not be able to reenter this web page after the simulation begins.

Accessing your factory

You will access your factory from the entry webpage by entering your team name and
password. Your instructor will provide a web address ending /entry.html. Opening that
link will give the login window illustrated in Figure 3.

An Overview of Littlefield Technologies

Figure 3

Littlefields factory is a web served Java application. You must have both the Java plugin and JavaScript enabled in your browser. Pop-up windows also display important
information about specific parts of the factory. Please do not block pop-ups while
working with your factory.

Using the simulator

This web-based simulator runs continuously. That is, if you view the site at 10 am, and
then view it again at 11 am on the same day, you will notice some simulated time has
elapsed. You have no control over the simulators clock. You may need to wait several
simulated days to see the effects of your actions. Constant monitoring is not
necessary to success.
Information specific to your particular assignment will be distributed prior to the
simulation. The information will specify variables and actions, which determine your
factorys performance. You may access your factory at any time of day. When the
assignment ends, your factory will quickly run the final 50 simulated days and return to a
suspended state. You may check the final status of your factory and download historic
data after the simulation ends but your factory will no longer be active.
Your factorys web page shows a schematic diagram of the job shop floor illustrated in
Figure 1. Clicking icons in the schematic will reveal menus that control your factory and
provide historic data. For example, clicking on a station icon will reveal a menu that
gives data about that station, as well as buttons for additional menus that allow machine
purchases or viewing a plot of the stations historic utilization rates. The specific
information available at each icon is listed on the last page of this document.
Your factorys status is automatically updated upon login. To update the factory status at
other times click the update button on the bottom of the web page. In light of the slow
speed of the simulator, there will be no point to frequent updates.
You should download factory data sets for in-depth spreadsheet analysis. Below each plot
you will find a download button. Clicking this button will initiate a download of the
tab-delimited text file containing the exact data points. Save this file to your desktop or
other useful location, and open the file with a spreadsheet application like Excel.
An Overview of Littlefield Technologies

Data points are recorded at the start of each day. You begin play at time zero on Day 50
and you end play at time zero on Day 218. The inventory plot uses a slightly different day
index that permits fractional days. New shipments of inventory can arrive at any point
during the day and stockouts can also happen at any time. When these events take place,
beginning and ending inventories are recorded in fractions of a day.
You may notice a few days where zero jobs exit the factory. On such days, the daily
average lead time and daily average revenues are meaningless. A value of zero will
appear in those plots on that day.
Cash on hand, after the last day, is the only winning condition.

An Overview of Littlefield Technologies

Icons on the Littlefield Technologies web page:

ICON
Order Queue:

INFORMATION AVAILABLE
Number of new customer orders by day
Average number of orders waiting for kits by day
Current pricing contract for arriving orders
Lot size

Materials Buffer:
Average number of kits (raw materials) in the buffer by day
Inventory costs
Reorder Point and Order Quantity
Time until the next shipment arrives
Station Queues:
Average number of receivers in process that are waiting while
machines in the station are busy, by day

Stations:
Number of machines at each station
Scheduling Policy used (for tester only)
Historical utilization of the station by day (i.e., the average
fraction of time a machine was busy at that station during that
day)
Completed Jobs:
Numbers of orders completed by day (by pricing contract)
Average order lead time by day (by pricing contract)
Average revenue per order by day (by pricing contract)
Clicking on the above icons will enable changes to certain features of the factory. Your
assignment handout will explain which features you may change.

Sources and uses of cash may be obtained by clicking the cash button in the factory
control bar. Sources of cash are revenue, machine scrap value, and interest. Uses of cash
are raw materials inventory and capacity purchases. Clicking the history button will
reveal team actions. Clicking the update button will refresh your screen. Clicking the quit
button will exit the factory. Clicking the overall standing button will show your teams
relative rank.

An Overview of Littlefield Technologies