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Little Field Essay

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After the initial observations of demand for littlefield labs (day 52), one of the first steps we took was to identify the bottleneck in the production chain. This was determined by looking at the rate of utilization of the three machines and the number of jobs in the queue waiting for these machines. It was quickly determined that the machine 1 was our bottleneck, as it was the only machine with 100% utilization and excess number of jobs in the queue. This meant that machine 1 was not able to keep up with the incoming demand and lacked the proper capacity. We knew that we needed to increase capacity and the decision was made to purchase another machine 1.
Following the decision to purchase a machine, our focus shifted to the inventory …show more content…

Using the excel spreadsheet and looking at the linear regression line, we determined that the approximate level of demand on day 120 would be about 18 kits per day. This number was critical to our overall strategy going forward. Since we knew the demand would average around 18 kits a day, we wanted to have enough capacity in the machines to handle the demand. We figured to calculate the demand capacity of each machines by looking at the level of utilization of each machines on day 1, when the very first order arrived. Using the percentage of utilization and the actual number of job coming in for the first time, we were able to calculate the capacity of each machine with relative accuracy. It was determined that machine 1 had the capacity of 4.5 jobs per day, machine 2 with capacity of 12.5 jobs per day, and machine 3 with capacity of 12jobs per day. This meant that in order for us to accommodate the expected level of demand, we needed to have five units of Machine 1, two units of Machine 2, and two units of Machine 3. We wanted to have five units of Machine 1 because we did not want to have just 4 and have 100% utilization, causing a bottleneck situation.
We also wanted to figure out the optimal reorder point and order quantity using the forecasted average demand of 18 jobs per day. We set the number of reorder point to 95 kits, accounting for the four day lead period and the level of safety stock we wanted to have.

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