Littlelabs Simulation

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when the drop will occur and when the downward trend started, we recalculated our demand for the last 3 weeks, using an estimate of 15 orders per week, which translated to a need of 315 units. We decided as a team to leave a buffer of 200 units on the shelf at the end of the simulation, for the physical cost of holding 1 kit at $100 in inventory is worthwhile when compared to the opportunity cost of sales of $250. Taking into consideration our on-hand inventory, we set the last order quantity to be 200, with a re-order point of 0.

CONTRACTS:

The Littlefield Labs case evaluated the willingness to pay for lab test results. Initially we were experiencing a long line of people waiting to get their labs run. The long wait was related to the inadequate number of step 1 machines and was correlated with a long run time, only allowing us to charge 200 as the lead times exceeded 14 days in some cases. As our team increased our capacity by adding more step 1 machines, the lead time dropped significantly, allowing the lead time to incrementally drop. We moved from charging 200 to 225 for the reduced lead time of less than 7 days. As we were able to achieve very short lead times of less than 1 day we quickly shifted to charging 250. The key to maintaining the short lead time included buying more step 1 machines and ensuring that we ordered significant amount of inventory.