2025-07-03 🔑 key decision variables are contract 1 and 2 (2, unless LT >>threshold), 🙋‍♀️formula for numbers of machines and the R and Q for inventory policy - **R,Q Formula:** R = (Daily Demand × 7 days=leadtime) + Safety Stock(safety factor, = √(2DS/H) where S=$500k) - **Machine Formula:** Machines = (Demand Rate × Processing Time) ÷ 0.85 target utilization --- the rest pros and cons of having larger lot - cons: set up cost for machine 3 (fixed) - maximize utilization of machines ### Littlefield Simulation: The Game Plan 🚀 The goal is to optimize your decisions to maximize the final cash balance, essentially solving: d(Expected Final Cash)​/d(Decision)=0 | Component | Details | | | | | | | | ---------------------- | --------------------------------------- | ----------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ----------------------------------------------------------- | | 🎯 **Objective** | Maximize your bank account on day 2001. | | | | | | | | 🕹️ **Your Decisions** | | **✍️ Contract Choice:** Pick the safer C1 ($35k) or the high-reward C2 ($50k) 5. | **🏭 Machine Count:** How many to own at each station 2. | **📦 Lot Size:** How many lots to split each 60-kit order into (1, 2, 3, 5, or 10) 3. | **📋 Inventory Policy:** Set the reorder point (R) and quantity (Q) 4444. | **🚦 Station 2 Priority:** Choose scheduling order: FIFO, Step 2, or Step 4 6. | **🚧 WIP Limit:** Set the max jobs allowed in the factory7. | | ⚙️ **The Rules** | | **🏦 Financials:** Start with $50M cash 13, earn 0.3% daily interest 14, and no debt allowed15. | **📈 Demand:** Grows, stabilizes, then collapses by day 200 8888. | **💰 Costs:** $1M per machine 9, $200 per kit 10, $500k per inventory order 11. | **🚚 Delivery Time:** 7-day wait for new inventory 12. | | | | 📊 **Your Score** | | | **💵 Cash Balance:** The final number in your bank account. <br>**⏱️ Factory Speed:** Measured by order lead times and completed jobs. <br>**💸 Total Revenue:** How much you earn from successful, on-time deliveries16. | | | | | 2025-06-26 buy enough machine for enough hroucoupt EOQ ![[littlefield 2025-06-26-13.svg]] %%[[littlefield 2025-06-26-13|🖋 Edit in Excalidraw]]%% ![[Recitation 3_2024.pptx]] order arrives interest -> optimal service rate (use to determine machine you need) GGN formula (expected wait time) sum of expected wait time (below the lead time) can't take loan (machine) faster throughput machine, order output: delivery (satelite) longer lead time, shorter lead time (smaller)