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Littlefield Final Report PDF

The group analyzed the supply chain of an automated blood testing lab to optimize profits. They found issues with low reorder points causing supply shortages. They calculated new reorder points and quantities, and identified bottlenecks. This led them to purchase additional machines. With the changes, they were able to take on a more profitable contract. Their decisions increased profits over the original model by over $100,000 in the simulation.

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140 views3 pages

Littlefield Final Report PDF

The group analyzed the supply chain of an automated blood testing lab to optimize profits. They found issues with low reorder points causing supply shortages. They calculated new reorder points and quantities, and identified bottlenecks. This led them to purchase additional machines. With the changes, they were able to take on a more profitable contract. Their decisions increased profits over the original model by over $100,000 in the simulation.

Uploaded by

jshen5
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Littefield Write Up 1

Group: Thundercats

Gino Slanzi | Diego Amenabar | Jake Cepela | Matt Ishibashi | Jian Bin Liew | John Shen

Introduction

Littlefield Labs is an automated lab that specializes in blood testing services. With

different steps through the chain, automation gives Littlefield a competitive advantage by

guaranteeing lead times. Our group has been tasked with analyzing the supply chain to optimize

and increase profits.

Process

The process starts with receiving the orders from the customers and matching the order

up with materials from the supplier. From there, it goes to the first step, sampling, which

originally had three machines. This step transfers the blood from the test kit to a test tube and the

reagents are added. From there, it goes into the second station, testing, which comprises steps

two and four and originally had one machine. This step determines the blood type of each test

tube and does further testing. The product continues to step 3, centrifuging, which originally had

two machines. Here, the blood is centrifuged to separate it into red and white blood cells. After it

returns to testing (station 2), the job is then completed. Each one of the steps also had a queue for

jobs to wait before processing if the step was unable to process quickly enough.

Analysis

The key decision-making variables for us to improve the process were reorder point and

quantity, queue time, and utilization rate. Starting with the reorder point and quantity, we

focused on ensuring Littlefield was ordering enough to cover their orders and orders during lead
time. From there, we looked at utilization of each step to see where the bottleneck was, and

which step would have the longest queue.

After analyzing our decision-making variables, it was apparent that the original reorder

quantity of 120 units and reorder point of 24 units were the first thing that needed addressing.

There were often periods where the supply chain was completely stopped due to a lack of

materials. We calculated the reorder point to be 58 units but increased that to 60 to give us an

increased buffer for the variation of orders during lead time. Further, we calculated the economic

order quantity to be less than the original order size of 120 but decided to leave the quantity as is

to ensure the process had enough materials. Next, we focused on the utilization and queue times

for each step. The original bottleneck was station 3 with a utilization of 87%, even with

downtime from not having supplies. Station 1 was a close second, with 85% utilization and a

large variability. To address this and the expectation of having materials on hand consistently

going forward, we purchased one Sample Preparing machine and one Centrifuging machine. We

then left the chain alone to analyze the time that the orders would spend in process before

determining if we could change to a more aggressive contract. After 22 days in the simulation,

we determined the new chain would be able to handle a more aggressive contract and changed to

contract 2 from the original, which increased each order from $750 to $1000 but with a quote

lead time of 1 day and maximum lead time of 3 days instead of a lead time of 7 days and

maximum lead time of 14 days.

Discussion

Working together, our team primarily focused on key metrics with brief discussions to

ensure we weren’
t strictly bound to the calculations. For instance, we were all agreeable to

increasing the reorder point since it was obvious that this was a key issue for the supply chain.
We discussed lowering the EOQ to the calculated amount but were concerned with not having

enough supplies during that lead time and decided against it. We also discussed purchasing

another machine for the testing station but decided to wait to see the new utilization once all

changes were made. This ended up working well as the second testing machine was not needed.

Conclusion

Our team finished 4th, with a cash balance of $1,702,197, beating the business as usual

model by over $100,000. Our decisions into purchasing more machines and increasing the

reorder point proved to be profitable in the short time frame. If we would have made these

changes earlier, the change would have been even greater. Other than starting earlier, our

decisions were sound and proved profitable. In conclusion, analyzing each area of the supply

chain led to an increase in profit over the same time frame even after investing more into the

supply chain.

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