Costs and Contract Terms

The second Littlefield simulation game focused on lead time and inventory management in an environment with a changing demand (“but the long-run average demand will not change over the product’s 268-day lifetime”). Therefore our strategy to win this game was controlling the Littlefield Lab’s system capacity and the inventory level with choosing a right contract as well as keeping the cash daily as much as possible. In other

We recalculated the average arrival rate over the entire simulation to be approximately 11.8 orders per day, which we rounded to 12 for a small buffer. Based on this daily consumption, we found what day the next reorder point would be which was day 222. We wanted to find the demand for the final 46 days with an average of 12 orders per day came up with a figure of 552 units needed to meet demand over the last 46 days. Since we already had 61 units at the time of ordering, we subtracted that figure from the 552 and came up with a final order value of 491. This value should allow us to have a low inventory level at the end of the simulation. To achieve this, we had to change the reorder point to zero. This strategies hinges heavily on the lab not being in existence past day 268, if that were not the case, we would not recommend this plan.

Our team operated and managed the Littlefield Technologies facility over the span of 1268 simulated days. Our team finished the simulation in 3rd place, posting $2,234,639 in cash at the end of the game. We did intuitive analysis initially and came up the strategy at the beginning of the game. And then we applied the knowledge we learned in the class, did process analysis and modified our strategies according to the performance results dynamically. We have reinforced many of the concepts and lessons learned in class and had a better understanding of the operation of the Littlefield Technologies facility and how certain modifications would affect the throughput and lead time.

In the Fixed-Order Quantity Model (Q-Model), every time that the stocks reach a specific level an order is placed. Q-Model requests a constant monitoring in inventory levels. The risk of stock out only occurs during the lead time, thus the safety stock is less than in P-Model for the same service level. Reorders are placed when stocks reach (R), and the safety stock that must be reordered is:

Bernie a resident of Richmond, Virginia decides to sale his 2006 Ford Fusion for $13,000.00 and places an ad in his local newspaper on February 1st. After several weeks without any inquiries, Vivian contacts Bernie on March 1st stating she will pay him $12,000.00 for the car. Bernie arranges to meet with Vivian on March 5th to complete the deal. Vivian comes to Bernie’s house on March 10th and says she will give Bernie $12,500.00 for the car; but she needs three additional weeks to come up with the money. Bernie agrees but only if Vivian puts down a deposit. Vivian agrees and Bernie drafts an agreement stated the sale will must take place no later than March 31st. Vivian reads and signs the agreement and

The options available for this company involve looking at different inventory models in order to allow this specialist the ability to produce outside high demand windows of opportunity. Initially this company began using the MRP system which enevitably helped to reduce the company’s inventory and at the same time improved their on-time delivery numbers. Currently the process has allowed the Space Age company to maintain a cost of $1.25 per week to store their Gemnini and $1.50 per week to store each of their Saturns that sat in inventory.

The strategy I chose for the simulation is “Niche Cost Leader." First, with the key focus being value, this strategy will challenge me to keep costs at a minimum and force me to streamline overall costs to produce a valuable commodity that, in turn, will generate financial success that can be shared with internal and external stakeholders. Second, as the success of this strategy primarily relies on the existing product line being prosperous, I will be able to practice and hone my forecasting skills based on one product. Though I eventually will produce more than one product, most of the simulation will be conducting under making the primary product as successful as it can be, and reliable forecasts are

Most business owners want to receive the lowest price possible, but you could find that your annual cost is much higher if you do not know what you will pay for the supplies and shipping. Will the leasing company charge you that on top of the Cost-Per-Copy contract? In some cases, this will be one of the hidden fees that you have to watch out for in a lease.

At Kara’s Bicycles, there are nine positions that needed to be filled at the beginning of each simulation. They are System Administrator, AP Specialist, AR Specialist, Purchaser, Frame Welder, Finisher, Wheel Builder, Assembler, and Materials Handlers. I hired three AP Specialists, AR Specialists, and Purchasers each. Due to having uncounted problems with my server, I hired four system administrators. Seven Frame Welders, four Finishers, nine Assemblers, and fifteen Wheel Builders rounded out my production floor. In addition to this, I also had twelve Material Handlers moving supplies and finished bicycles throughout my building. I came about these numbers by trial and error. It is inevitable that the need for each job position will increase as time goes on. As the business expands and is able to take on larger orders the need for

I am a little unsure why the element of ordering costs would have been left out of the equation except for the added variability to inventory it would cause. But since it was left out of the game, the inventory was allowed to be kept lower than if ordering costs remained in the game. Since there were no ordering costs, inventory was ordered on almost every cycle within the supply chain. Reaction of inventory fluctuations within the system or the bullwhip effect is another focus of what the game teaches. If ordering costs were in play it may distort the effect. With no ordering costs the bullwhip effect is evident.

In February, Dr. Settle’s medical assistant was stuck with a patient needle while giving an injection. An HIV panel was added to his labs per Baptist Health. The bill should transfer from the patient to the office. How can we move the balance over to BHMG Family Medicine – Princeton? In addition, will Dr. Settle receive contract pricing?

As we noticed a trend of higher lead times per increased order delivery schedule, we began to understand the nature and relation of machine utilization and our job completion rate. It was clear that we needed to focus our efforts on keeping utilization rates as high as possible without max them out. Our contract allowed us three days maximum for delivery, otherwise our entire revenue of $1000 would be forfeit. However, we quoted a lead time of one day, so we focused heavily on managing machine utilization because we wanted to maintain high service levels and capture revenue. Originally, we focused on Station 1 since its utilization was the first to approach maximum capacity; we decided that was an issue that needed to be resolved immediately. Since the demand was consistently going up for the first five months, we knew that the utilization of the entire facility, not just Station 1, would be steadily increasing. As we solved the capacity issues of a particular station by purchasing more machines, we would focus on the next station in which utilization was near its limit.

Even though that inventories were lowered in the projected 5 year forecast, what they can do to manage inventory is to do a just in time. By lowering inventory they would be able to further reduce the costs.

Based on the calculation above, both of drilling processes and Inspections process are over 100% of utilization and because the drilling processes is critical for production process and product quality, this fact is considered to be the bottleneck of the company. In addition, the exhibit 2 does not show actual production time which should include reworking time and administrative time and therefore it doesn’t show the precise productivity.

Unit 4 Financial Control in Hospitality - Assignment 2 - Costing and Pricing in Hospitality