Simulation Exercises

Littlefield Technologies Factory Simulation Exercises

As part of your team of at most 3 students, you will get to manage a virtual factory in two separate web-based simulation exercises. The goal of this assignment is to let you adapt and apply concepts from the first half of the class in a managerial situation; it will also give you a chance to formalize your own decision models and test their relevance and effectiveness.

The platform for the Littlefield simulation game is available through the Littlefield Technologies simulator. Once you have access to your factory, it is recommended that you familiarize yourself with the simulation game interface, analyze early demand data and plan your strategy for the game. When the game goes live, you will then receive additional customer orders and gain the ability to manage your factory.

Experience demonstrates that advance planning and sound use of quantitative models blending physical and financial considerations provide key competitive advantages in this game.

The first exercise involves a reduced set of managerial decisions and is designed to help your team create its decision models before the full version of the game is played as part of the second exercise. After the second simulation is over, each team will turn in a written report of at most 4 pages (excluding appendices) about this final exercise which should contain your answers to the following questions:

  1. How did you forecast demand? For what decisions in the game did you find it most useful to have a demand forecast available? A posteriori, were you happy with your demand forecasting technique and would you use the same one if the game was to start over again? If not, define precisely how you would forecast demand for another potential run of the simulation.
  2. What models and/or considerations did you use to decide how many machines of each type to buy initially? Later on during the simulation, how did you decide how many more machines to buy or sell? A posteriori, were you happy with your capacity decision process and would you use the same one if the game was to start over again? If not, define precisely how you would make capacity decisions for another potential run of the simulation.
  3. How did you decide on the parameters of your (R, Q) inventory replenishment policy? How did you update these parameters over time? A posteriori, were you happy with your inventory model and would you use the same one if the game was to start over again? If not, define precisely how you would set inventory replenishment parameters decisions for another potential run of the simulation.
  4. How did you decide initially and later in the game what type of contract to go after? A posteriori, were you happy with your method/model for quoting lead-times and would you use the same one if the game was to start over again? If not, define precisely how you would choose which contract type to use for another potential run of the simulation.
  5. Describe your factory’s performance during the simulation, both in absolute and relative terms, and provide an interpretation. Is there anything not already mentioned in any of your previous answers which you would do in order to improve your performance if you were to play the game a second time?
  6. What are the most important lessons you learned or insights you gained from playing this simulation game?

IMPORTANT: Whenever asked for what you would do for another potential run of the simulation, you should not just state that you would use a better strategy relying on some analysis or model, but instead actually provide that analysis and/or implement that model so you can describe it in detail in your report. For example, only stating “If the game started again we would use a better model taking X into account.” will not receive any credit unless you define that better model explicitly and show exactly how it takes X into account.

Retailer Pricing Simulation Exercise

Your team’s goal in this assignment is to implement a generic markdown pricing strategy for a retailer seeking to maximize revenue when selling some inventory over a limited time period. A couple of days before the due date, students will receive an email containing some random seed numbers (a computer code which determines the random scenario you will be facing) on which you should apply the strategy you will have developed by then.

Your team’s assignment for this simulation exercise consists of a report of at most 4 pages (including the computer printouts) containing your answers to the following questions:

  1. Provide a detailed description of the markdown pricing strategy which you have implemented, based on the framework presented during the lecture. The description should be generic, i.e., it should enable the reader to apply your strategy exactly in any instance of the game.
  2. What is the rationale underlying the strategy you described in the previous question, i.e., why do you think it is a good strategy?
  3. Provide a commented example of the application of your strategy to the first of the six runs generated under the “Set Seed” mode with the first random seed provided.
  4. Provide a printout of both the detailed and summarized outcomes of the application of your pricing strategy to the six runs obtained with each of the six random seeds provided. How much revenue have you generated in total?

The required simulation software was provided to students by the MIT Sloan School of Management along with historical sales data on which students were to perform statistical analysis. It was recommended that students leave themselves at least a week before the assignment was due in order to develop and test their strategy.

Course Info