Reference no: EM132339846

Supply Chain Modeling Assignment -

Learning Outcomes -

1. Understand the conditions and applicability of different supply chain models.

2. Apply common modeling techniques and optimization approaches for supply chain management.

3. Assess the trade-offs among different aspects of supply chain management, such as cost, time, and service level, and interpret the outputs from supply chain models.

Please note all the information and any related data presented in this document are NOT accurate, and are not supported by any reference either. They are only provided for you for this assessment item. You should not assume that this is real data.

1. Background -

Dronautics Ltd., a drone manufacturer operating across three manufacturing sites across Australia, has experienced a big surge in demand for their products over the past few years. Table 1 shows the current year's demand information for 12 markets across Australia.

Dronautics is currently manufacturing in Cairns (QLD), Darwin (NT), and Mandurah (WA). There are two distribution centers in its supply network, one in Adelaide (SA), and one in Newcastle (NSW). The company demands all products to go though the distribution centers for operational consistency.

2. Transportation Options

While Dronautics was able to ramp up their production for the demand, the management team realized that the current transportation network is costing too much, as products

Region	Demand	State(s)
Sydney	50,230	New South Wales
Melbourne	49,360	Victoria
Brisbane	24,630	Queensland
Perth	20,590	Western Australia
Adelaide	13,460	South Australia
Gold Coast-Tweed Heads	6,790	Queensland/New South Wales
Newcastle-Maitland	4,870	New South Wales
Canberra-Queanbeyan	4,580	Australian Capital Territory/New South Wales
Sunshine Coast	3,330	Queensland
Wollongong	3,020	New South Wales
Geelong	2,680	Victoria
Hobart	2,330	Tasmania
Table 1: Number of drones demanded across 12 Australian markets.

 

	Per Pallet ($)		Per Unit ($)
	Adelaide	Newcastle	Adelaide	Newcastle
Cairns	790.00	660.00	6.00	5.00
Darwin	530.00	920.00	4.00	7.00
Mandurah	790.00	1,190.00	6.00	9.00
Table 2: Pallet and unit transportation costs from plants to distribution centers.

 

	Per Pallet ($)		Per Unit ($)
	Adelaide	Newcastle	Adelaide	Newcastle
Sydney	530.00	130.00	4.00	1.00
Melbourne	460.00	530.00	3.50	4.00
Brisbane	590.00	330.00	4.50	2.50
Perth	860.00	1,060.00	6.50	8.00
Adelaide	70.00	590.00	0.50	4.50
Gold Coast-Tweed Heads	590.00	330.00	4.50	2.50
Newcastle-Maitland	590.00	70.00	4.50	0.50
Canberra-Queanbeyan	460.00	200.00	3.50	1.50
Sunshine Coast	660.00	400.00	5.00	3.00
Wollongong	530.00	200.00	4.00	1.50
Geelong	460.00	530.00	3.50	4.00
Hobart	1,320.00	1,580.00	10.00	12.00
Table 3: Pallet and unit transportation costs from distribution centers to markets.

used to be transported in individual units.

Dronautics decides to use pallets when possible. For those drones that are not packed into a pallet, they will be individually transported throughout the supply network as before. The shipping costs for pallets are much more attractive, as there are no additional handling, shrinking wrapping, and manual operations involved. Once a drone is shipped in pallets, they will remain in pallets until arrive final destinations. A standard pallet holds 240 drones.

Tables 2 and 3 list the transportation costs for one pallet and one unit between the plants and the distribution centers, and between the distribution centers and the markets.

3. Manufacturing Planning

Currently the unit production costs (excluding materials and components) across the three manufacturing plants are $43/unit in Cairns, $40/unit in Darwin, and $42/unit in Man-durah.

Based on the new transportation options available, Dronautics wants to know how many units to produce at each manufacturing site, and the corresponding distribution across its supply network.

4. Production Relocation -

At the same time, Dronautics is also considering relocating its production facilities, as all three plants are not close to major markets. It was proposed that one new manufacturing facility to be opened and co-locate with one of the distribution centers. By doing so, Dronautics will be able to leverage the manufacturing economy of scales and be more responsive to market demand.

If a drone is to be produced at the new facility, the unit production cost will be $33 in Adelaide, and $32 in Newcastle, as a result of consolidation of manufacturing activities. The new manufacturing facility will cost $1.5 million annually to operate over its designed lifespan. With the co-location, products will be directly shipped out of the manufacturing facility. Dronautics will continue to use the pallets when possible. The existing manufacturing facilities will be use to manufacture other products.

5. Tasks -

You will be using network optimization techniques, and based on the models you constructed, to answer the questions like the following ones (but you are not limited to those):

1. The manufacturing plans at Cairns, Darwin, and Mandurah, the three manufacturing sites.

2. The distribution network and the associated ows over the whole network.

3. How rational is the policy that products have to go through the distribution centers? If this could be changed, what changes you would like to propose? What results you would expect to see?

4. How much will be the cost difference, if breaking down of pallets (i.e., taking products from fully packed pallets) is allowed?

5. Assess whether it will be worthwhile if Dronautics relocates its production to either Adelaide or Newcastle.

6. If the production relocation is profitable, which site should be chosen? How much would be the cost saving? If the production location is not profitable, by how much should the annual operating cost reduce so that it will be attractive to Dronautics again?

7. Discuss the impact of production relocation to cycle and safety stocks, try to pick appropriate parameters to estimate the effect.

8. Construct at least one other possible scenario, and discuss your findings.