Reference no: EM132304137
Analyzing Logistics Costs
Assignment Overview
One of the challenges in managing supply chains comes in integrating operations when firms merge. In this assignment, you will analyze logistics cost in such a situation. Further, you will consider the challenges in merging systems.
Assignment Directions
To complete this assignment:
• Review Case 6, "Western Pharmaceuticals (A)," and Case 7, "Western Pharmaceuticals (B)" on pages 453-457 of your Supply Chain Logistics Management text.
• Write a 3-4-page paper with supporting appendices, answering questions 1, 2, and 3 on page 457.
• In answering these questions, utilize Excel data referenced in the case. In addition, assume that Western Pharmaceuticals and Atlantic Medical use two different ERP systems.
Also, discuss management challenges in the systems area in merging the two firms, along with opportunities for innovation and growth. For example, how might management use this merger to upgrade technology and add new competitive capabilities? In your paper, be certain to:
o Analyze the costs of a logistics system using cost data.
o Evaluate the challenges and opportunities that come when merging systems from two organizations.
Other Requirements
Your paper should meet the following requirements:
• Written communication: Written communication is free of errors that detract from the overall message.
• APA formatting: Your paper should be formatted according to current APA style and formatting guidelines.
• Length: 3-4 typed and double-spaced pages, not including the supporting appendices.
• Font and font size: Times New Roman, 12 point.
CASE : Western Pharmaceuticals (B)
Questions
1. What should the case fill rate be for each product given the current uncertainty levels and order quantities and how does the calculated aggregate case fill rate differ from the historically observed level?
2. What are the safety stock and average inventory levels for each product and in aggregate necessary to achieve 95 percent case fill rate for each product? To what extent do the actual inventory levels deviate from the theoretical inventory levels? What conclusions can you draw from the differences?
3. What is the inventory carrying cost impact for increasing the case fill rate from the current level of 95 percent to 99 percent? Assume an annual inventory carrying cost of 20 percent. Assuming that 5 percent is potentially lost due to stockouts (100 - 95 percent) and that there is a 25 percent margin on the average item (COGS = 75 percent), would you recommend that the service level be increased? Justify your answer.
4. What would be the impact on inventory and service of consolidating all of Atlantic Medical stock into a single facility? Apply both the "square root of N" and item level approaches. The square root of N should be applied to aggregate inventory values for a total of all products. The item level approach uses the individual standard deviations. Discuss the differences between the two approaches. Why?
Attachment:- Assignment.rar