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Stanford University Graduate School of Business rev. September 2002 Managing Customer Responsiveness
 

Summary: Stanford University Graduate School of Business rev. September 2002
Managing Customer Responsiveness
at Littlefield Technologies
Background
Littlefield Technologies (LT) has developed another DSS product. The new product is
manufactured using the same process as the product in the assignment "Capacity Manage-
ment at Littlefield Technologies"-- neither the process sequence nor the process time dis-
tributions at each tool have changed. The LT factory began production by investing most
of its cash into capacity and inventory. Specifically, on day 0, the factory began operations
with three stuffers, two testers, and one tuner, and a raw materials inventory of 9600 kits.
This left the factory with zero cash on hand. Customer demand continues to be random,
but the long-run average demand will not change over the product's 486-day lifetime. At
the end of this lifetime, demand will end abruptly and factory operations will be termi-
nated. At this point, all capacity and remaining inventory will be useless, and thus have no
value.
Management is currently quoting 7-day lead times, but management would like to charge
the higher prices that customers would pay for dramatically shorter lead times. In addition,
because the factory is essentially bootstrapping itself financially, management is worried
about the possibility of bankruptcy. To minimize this threat, management policy dictates
that new equipment cannot be purchased if the remaining cash balance would be insuffi-

  

Source: Ayhan, Hayriye - School of Industrial and Systems Engineering, Georgia Institute of Technology

 

Collections: Engineering