MGF5961 Supply Chain Management
Question 1 (12 marks-300 words)
A supply chain is typically made up of suppliers, manufacturing plants, warehouses, distribution centres and retailers. Specifically focusing on the importance of warehouses, your consulting firm (Elite Consulting) has been contacted by the following 2 companies (Live Better and Fly Faster) in helping them identify and carefully understand how issues pertaining to: a country’s unique geographical and infrastructure conditions, its natural resources and available labour resources, and the country’s local tax and industry laws and public interest could affect the choice of potential warehousing sites. What advice would you offer the following two companies that have approached your consulting firm.
- Live better – a pharmaceuticals company making everyday prescription drugs
- Fly faster – a burgeoning company that is in the business of making passenger aircrafts
Beyond this, given the very dynamic environment we live in, what specific advice can you provide to your three clients on service level requirements. Finally, when it comes to making such decisions, why would it be critical for your clients to involve the following departments in their organisation: Senior management, Manufacturing and Operations department.
Question 2: (12 marks) (350 words)
“In the future, only companies that make sustainability a goal will achieve competitive advantage. That means rethinking business models as well as products, technologies, and processes” (Nidumolu et al., 2009).
Critically discuss this statement and explain the challenges, competencies needed and opportunities associated with new business models. Provide suitable examples for your answers.
(please note that this article is available in your readings list titled: Why sustainability is now the key driver of innovation by authors Nidumolu, Ram; Prahalad, C.K.; Rangaswami, M.R.)
Question 3: 21 marks (350 words)
A. EOQ question
A museum on maritime history located in a popular seaside town recently opened up a gift shop on its premises. However, managing inventories for this museum has become a serious problem. Inventory turnover is much too low, which squeezes profit margin and causes cash flow problems. One of the most popular selling items on maritime history at the museum’s gift shop is a hand painted luxury barometer. Sales are 300 units per month, and the supplier charges $60 per unit. The cost of placing an order with the supplier is $30. Annual holding costs are 25 percent of a barometer’s value, and the museum operates 360 days per year. Lead time is five days. Management chose a 300-unit lot size so that new orders can be placed less frequently.
To help management better manage its inventory problem, you are to
- Calculate the EOQ. (2 marks)
- How much total annual cost is saved if the EOQ quantity is ordered? (2 marks)
- What is the optimal number of orders per year? (2 marks)
B. Variability especially in customer demand can create a number of challenges for firms in a supply chain. Critically explain the penalties that manufacturers and operations/supply chain managers (1 penalty from each standpoint) could face from this highly variable demand. Next, explain briefly 3 strategies that manufacturing firms could consider in coping with this huge variability? (7.5 marks)
C. Who doesn’t love having a big bowl of cereal for breakfast for a nourishing start to their day. Cereals therefore make up for an important meal of the day. Looking at the supply chain for breakfast cereal, critically discuss the competing objectives of the following key players in the supply chain: Raw material supplier; Manufacturing company; Logistics department; Marketing department; Distribution arm of the grocery chain; and Grocery store manager. (7.5 marks)