Marketing Strategies for Equipment and Facilities Improvement

Marketing Strategies for Equipment and Facilities Improvement

As previously mentioned, our group decided to focus on the most obvious potential drawback: Station 2. We decided to purchase more Station 2 machines, since that station would have to process each unit of production twice instead of just once like station 1 & 3. What we underestimated, and in retrospect - our biggest mistake, was the fact that the value for the factory output end product drops if the order is not executed with expedience. As a result, we experienced high queue times for station 3 for a period of 60 days during our highest time of activity. Utilization for station 3 during those times was naturally very high and bordering on 1.0. We lost significant proceeds on late orders, due to the queue timing delays. This issue was not helped significantly by our subsequent machine purchases. Throughout the course of this game we bought machines in order to prevent an impending problem, rather than as a part of a thought out winning strategy. This was reflected in our extremely high lead times from day 60 to day 90, and from day 130 to around day 195. Due to the condition that If an order is still in the factory 24 hours after it arrived, then a lateness penalty is incurred. Moreover, the total revenue for an order linearly decreases from $1000 for a 24-hour lead time to $0 for the maximum lead time of 72 hours. Orders that take longer than 72 hours to fill generate no revenue at all. Therefore, we failed to realize that from day 133 to 191, we were making no revenue at all! Not surprisingly, during this time, we failed to realize the high correlation between the 100% utilization rates during these days in station 1 and station 3 and our incredibly high throughput time during this period. We failed to act quickly to decrease the utilization rates and thus the factory’s financial situation only worsened as time progressed.

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