SCM

BJMP6023Supply Chain Management

UNIVERSITI UTARA MALAYSIAMASTER OF BUSINESS ADMINISTRATION(MBA)Case Study: Designing the Production Network at CoolwipesSubmitted By:Tharshini Manalan(COHORT 9 - ID 814789)ForSUPPLY CHAIN MANAGEMENT (BJMP 6023)DR. MARTINO LUIS

Case study: Designing the Production Network at CoolwipesQuestion 1What is the annual cost of serving the entire nation from Chicago?Based on the calculation below, the total cost to serve Chicago is $32,661.40.Plant Costs and Capacity

WipesOintment

Plant Fixed CostVariable Cost/unitCapacityFixed CostVariable Cost/unitCapacity

Chicago50001050001500201000

Princeton, NJ22001020001500201000

Atlanta22001020001500201000

LA22001020001500201000

Regional Demand by Product

ZoneNorthwestsouthwestUpper midwestlower midwestnortheastsoutheastTotal

Wipes50070090080010006004500

Ointment50901206512070515

Transportation Costs

NorthwestsouthwestUpper midwestlower midwestnortheastsoutheastTransport cost Multiplier

Chicago 6.32 6.32 3.68 4.04 5.76 5.96 1

Princeton, NJ 6.60 6.60 5.76 5.92 3.68 4.08

Atlanta 6.72 6.48 5.92 4.08 4.04 3.64

LA 4.36 3.68 6.32 6.32 6.72 6.60

Wipes Variables

NorthwestsouthwestUpper midwestlower midwestnortheastsoutheastFixedCapacity

Chicago50070090080010006001500

Princeton, NJ00000000

Atlanta00000000

LA00000000

Demand000000

Ointment Variables


Chicago509012065120701485

Princeton, NJ00000000

Atlanta00000000

LA00000000

Demand000000

Total Cost32661.4

Question 2Do you recommend adding any plant(s)? Is so, where should the plant(s) be built and what lines should be included? Assume that the Chicago plant will be maintained at its current capacity but could be run at lower utilization. Would your decision be different if transportation costs are half of their current value? What if they were double their current value?There was reduction of total cost to $29,188.80. Based on this reduction would like to recommend on building a plant at Princeton, Atlanta and LA. All of this plant can offer both the Wipes and Ointment product line. The calculation is shown below :

Plant Costs and Capacity

WipesOintment


Chicago50001050001500201000

Princeton, NJ22001020001500201000

Atlanta22001020001500201000

LA22001020001500201000



Wipes50070090080010006004500

Ointment50901206512070515



Chicago 6.32 6.32 3.68 4.04 5.76 5.96 1

Princeton, NJ 6.60 6.60 5.76 5.92 3.68 4.08

Atlanta 6.72 6.48 5.92 4.08 4.04 3.64

LA 4.36 3.68 6.32 6.32 6.72 6.60

Wipes Variables


Chicago009008000013300

Princeton, NJ0000100000.50

Atlanta000006000.30

LA50070000000.60

Demand000000


Chicago0012065001815


Atlanta00000700.070

LA509000000.140

Demand000000

Total Cost29188.8

The recommendation would remain the same to build all the additional plants, but with different production quantities if the transportation costs were half their current amount as the resulting total cost would now be $16,947. 88 as calculated below:


WipesOintment


Chicago50001050001500201000

Princeton, NJ22001020001500201000

Atlanta22001020001500201000

LA22001020001500201000



Wipes50070090080010006004500

Ointment50901206512070515



Chicago 3.16 3.16 1.84 2.02 2.88 2.98 0.5

Princeton, NJ 3.30 3.30 2.88 2.96 1.84 2.04

Atlanta 3.36 3.24 2.96 2.04 2.02 1.82

LA 2.18 1.84 3.16 3.16 3.36 3.30

Wipes Variables


Chicago148.3937196.58816264.565234.148546270.3321168.919078213717.053

Princeton, NJ115.8152165.81522212.283187.675122245.4469145.05434890.536040

Atlanta115.8797166.05073211.969191.286233244.7403145.91787550.537770

LA120.2114171.54589211.184186.890098239.4807140.10869740.534710

Demand000000

Ointment Variables


Chicago45.2536253.50844878.985559.818838759.7524145.839365011656.8418

Princeton, NJ0.17512210.17512314.14250.7850251722.306769.4142536280.0570

Atlanta010.4106313.82854.3961361221.6002410.277779260.060510

LA4.57125615.90579913.0435016.3400584.4686021020.054330

Demand000000

Total Cost16947.88

If transportation costs were double their current levels, the recommendation would be to stay with the Chicago facility servicing the entire nation as the total costs would rise to $86,530.20.Plant Costs and Capacity

WipesOintment


Chicago50001050001500201000

Princeton, NJ22001020001500201000

Atlanta22001020001500201000

LA22001020001500201000



Wipes50070090080010006004500

Ointment50901206512070515


NorthwestSouthwestUpper midwestlower midwestNortheastSoutheastTransport cost Multiplier

Chicago 12.64 12.64 7.36 8.08 11.52 11.92 2

Princeton, NJ 13.20 13.20 11.52 11.84 7.36 8.16

Atlanta 13.44 12.96 11.84 8.16 8.08 7.28

LA 8.72 7.36 12.64 12.64 13.44 13.20

Wipes Variables

NorthwestSouthwestUpper midwestlower midwestNortheastSoutheastFixedCapacity

Chicago009008000013300


Atlanta000006000.30

LA50070000000.60

Demand000000

Ointment Variables

NorthwestSouthwestUpper midwestlower midwestNortheastSoutheastFixedCapacity

Chicago0012065001815


Atlanta00000700.070

LA509000000.140

Demand000000

Total Cost86530.2

Question 3As calculated below in the three spreadsheets, the recommendations would be exactly as above for current costs, transportation costs at half their current level and with transportation costs at double their current costs. The only difference in the recommendations would involve the production quantities at each facility.


WipesOintment


Chicago50001050001500201000

Princeton, NJ22001020001500201000

Atlanta22001020001500201000

LA22001020001500201000



Wipes50070090080010006004500

Ointment50901206512070515



Chicago 6.32 6.32 3.68 4.04 5.76 5.96 1

Princeton, NJ 6.60 6.60 5.76 5.92 3.68 4.08

Atlanta 6.72 6.48 5.92 4.08 4.04 3.64

LA 4.36 3.68 6.32 6.32 6.72 6.60

Wipes Variables


Chicago110.8526147.57128329.807264.962732213.3321102.93810710.233890

Princeton, NJ119.5143169.51426193.529171.416398278.5836175.69637020.554130

Atlanta117.7819171.2466191.219197.978638273.3866182.04828040.566830

LA151.8513211.66785185.445165.641932234.6977139.31724230.544310

Demand000000

Ointment Variables


Chicago0012049.3274491000.169330

Princeton, NJ06.84134470065.1392936.906517060.108890

Atlanta7.89491221.368701015.672550946.7748133.093482940.12480

LA42.1050961.789955008.085900.111980

Demand000000

Total Cost31015.503


WipesOintment


Chicago50001050001500201000

Princeton, NJ22001020001500201000

Atlanta22001020001500201000

LA22001020001500201000



Wipes50070090080010006004500

Ointment50901206512070515



Chicago 3.16 3.16 1.84 2.02 2.88 2.98 0.5

Princeton, NJ 3.30 3.30 2.88 2.96 1.84 2.04

Atlanta 3.36 3.24 2.96 2.04 2.02 1.82

LA 2.18 1.84 3.16 3.16 3.36 3.30

Wipes Variables


Chicago123.8451160.56383342.799277.955261226.3247115.93066090.249480

Princeton, NJ115.1834165.18324189.198167.085556274.2527171.36551690.541130

Atlanta113.4511166.91575186.889193.6488091269.0557177.71742510.553840

LA147.5204207.337181.114161.311092230.3668134.9863970.531320

Demand000000

Ointment Variables


Chicago0012049.3274491000.169330

Princeton, NJ06.84134470065.1392936.906517060.108890

Atlanta7.89491221.368701015.672550946.7748133.093482940.12480

LA42.1050961.789955008.085900.111980

Demand000000

Total Cost11948.843


WipesOintment


Chicago50001050001500201000

Princeton, NJ22001020001500201000

Atlanta22001020001500201000

LA22001020001500201000



Wipes50070090080010006004500

Ointment50901206512070515



Chicago 12.64 12.64 7.36 8.08 11.52 11.92 2

Princeton, NJ 13.20 13.20 11.52 11.84 7.36 8.16

Atlanta 13.44 12.96 11.84 8.16 8.08 7.28

LA 8.72 7.36 12.64 12.64 13.44 13.20

Wipes Variables


Chicago00900800000.340


Atlanta000006000.30

LA50070000000.60

Demand000000

Ointment Variables


Chicago0012065000.1850


Atlanta00000700.070

LA509000000.140

Demand000000

Total Cost82007.7

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