Stanford University Graduate School of Business September 2007Written by Sunil Kumar and Samuel C. Wood, both Assistant Professors at the Stanford University Graduate School of Business. Copyright 1998. No part of this document may be reproduced without permission from Responsive Learning Technologies, Inc., at [email protected] Technologies: Overview IntroductionLittlefield Technologies is a job shop which assembles Digital Satellite System receivers. These receivers are assembled from kits of electronic components procured from a single supplier. The assembly process consists of four steps carried out at 3 stations called board stuffing, testing and tuning. The first step consists of mounting the components onto PC Boards and soldering them. This is done at the board stuffing station. The digital compo-nents are then briefly tested at the testing station in step 2. In the third step, key compo-nents are tuned at the tuning station. Finally, the boards are exhaustively “final tested” in step 4 at the testing station before delivery to the customer. Every receiver passes final test.All the stations consist of automated machines which perform the operations. You may purchase additional machines during the assignment. Board Stuffing machines cost $90,000, testers cost $80,000, and tuning machines cost $100,000. You can also sell any machine at a retirement price of $10,000, provided there is at least one other machine left at that station. The operators are paid a fixed salary, and increasing the number of machines at a station does not require any increase in the number of operators.Littlefield Technologies: Overview 2Orders arrive randomly at the factory. Each order is for 60 receivers. When an order arrives it is matched up with 60 raw kits and becomes a manufacturing lot. If an order arrives and there are less than 60 raw kits in the materials buffer, the order waits in the cus-tomer order queue pending arrival of raw kits. In addition, orders are not accepted if the total number of orders in the system (waiting for kits or in process) exceeds 100. If it is allowed in the assignment, the 60 kits may be sub-divided into several manufacturing lots just prior to entering the factory. Processing a lot on each machine entails performing a setup on the machine, processing each kit in the lot (one at a time), and then sending the completed lot on to the next station. Once all the receivers in an order are completed, the order is shipped immediately. A job is not shipped to its customer until all of the lots in the job are completed.Raw kits are purchased from a single supplier and cost $10 per kit ($600 per order). There is also a fixed cost of $1000 per shipment of raw kits, independent of the shipment size. The supplier requires four days to ship any quantity of raw kits. An order for new raw kits is placed with the supplier when the following three criteria are met: (1) the inventory of raw kits is less than the material reorder point, (2) there are no orders for raw kits currently outstanding, and (3) the factory has sufficient cash to purchase the specified order quan-tity. If it is allowed in the assignment, you may set the reorder point and order quantity independently to any multiple of 60 kits, as long as that multiple is greater than zero.The current pricing contract is as follows. An order does not leave the factory until all 60 kits in the order are completed. A customer order filled within the quoted lead time of 24 hours earns $1000. If an order is still in the factory 24 hours after it arrived, then a lateness penalty is incurred. Specifically, the total revenue for an order linearly decreases from $1000 for a 24-hour lead time to $0 for the maximum lead time of 72 hours. Orders that take longer than 72 hours to fill generate no revenue at all. If it is allowed in the assign-ment, you may select from a menu of other contracts for future orders. More lucrative con-tracts will have shorter quoted lead times and shorter maximum lead times. You will have some cash on hand when the assignment begins. This amount is depleted by buying machines as well as by buying raw kits from the supplier. The revenue earned from filled orders increases the cash balance. The balance earns interest (compounded every simulated day) at a compounded rate of 10% per year. There are no taxes. All fixed over-head over which you have no control, such as salaries, rent, utilities, etc. are ignored. To reduce the chance of bankruptcy, you are not allowed to purchase a machine if the result-ing cash balance would be too low to purchase an order of raw materials at the current order quantity.The winning team is the team with the most cash at the end of the game. You can compare the cash status of your team to other teams by clicking on the “Overall Standing” button on the bottom of the web page. Registering your teamBefore the first assignment begins, you will need to create and register your team. There should be four students per team. Come up with a team name consisting only of lower-case letters (no punctuation) and a team password. Your instructor will give you the address for the registration web page. The web page is shown at the top of the next page.Littlefield Technologies: Overview 3On the registration page, you will first have to enter the code given in class. Once you have entered the code, you will be asked for the team name and the password that you came up with. Finally, you will be asked for the names of each of the team members. After you submit this information from the web page, your team will be registered. Later, if you decide to change you team name, password, or members before the assignment begins, you can simply return to the registration page, enter the same team name and password you entered the first time, and then make your changes. To completely remove your team, delete all of the team members’ names and save the resulting team. You will not be able to make any changes to your team after the assignment begins. Accessing your factoryWhen the assignment begins, you can access your factory from the entry web page using the team name and password that you previously registered. Your instructor will give you the address for the entry web page. The entry web page is shown below. To access your factory, your browser must have the Java plug-in and Javascript enabled (these are the defaults on most browsers) and you must turn off any pop-up blocking