Costs and Contract Terms

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LITTLEFIELD TECHNOLOGIES 2nd edition
The Return of The Honeybadgers

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Executive Summary
Over the span of 168 simulated days, team Honeybadgers managed the Littlefield Technologies job shop. The team’s objective was to maximize the firm’s cash position relative to the rest of the class. Using 50 days of historical data, the team reviewed re-order points, re-order quantity, capacity, lead times, and therefore contract terms. The team also weighed the cost of new machines against capital for inventory and interest rates, evaluating the return on investment and the impact a new machine had on lead times. Using this consideration set, team Honeybadgers purchased one tuning machine, one
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Inventory Strategy Final Hours:
During the last 12 simulation days we considered developing a plan to minimize our inventory at the end of the simulation. However, we were not sure how to calculate this, and the costs associated with running of inventory was too high to risk making a mistake.
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Results

The Honeybadgers team finished the Littlefield simulation in fifth place, posting $1,511,424 in cash. The team’s final cash position was $104,192 below the first place team, earning 93.5% of their total revenue.
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Risks and Evaluations

At the beginning of the simulation, we wanted to maintain a high R and Q because we wanted to avoid high ordering costs.
While we considered keeping inventory low to save money for a new machine, we were not sure the improved lead time could offset the cost of machines.
However, in hindsight we realized that we could have managed R and Q better early in the simulation, so as to minimize the amount of excess raw inventory. We now know that we could have adjusted R according to the variability of demand, holding that the more demand fluctuates; the higher R is and vice versa. We believe that this tactic could have allowed us to accumulate enough cash to purchase machines earlier, possibly as early as day 80 or 90.
Purchasing a machine earlier could have

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