The following needs to be submitted as a report in APA format using the attachment case study final as a starting point. The 16 questions answered in that attachment will be used in the report to help answer all of the critical elements that need to be addressed per the rubric also attached. Lastly, attached as well is the data sheet which will help with any calculations needed to show work throughout the report as well.
I need this assignment NLT this Friday 10/15/2021 by 11am EST.
|NOTICE: HOVER OVER CELLS WITH RED INDICATOR SYMBOLS IN UPPER RIGHT CORNER TO READ IMPORTANT COMMENTS|
Richard Horne: Question 3
|Current Sales Year||Projected Sales||0.07||Warranty Rate
Richard Horne: The stated warrant rates below are based on historic data.
|Bicycle types||Raw Materials – Metals||Raw Materials – metals – Oursourced||Raw Materials – Components||Selling Price||Richard Horne: This is the profit calculation of materials before adding the shipping costs. That is, just the selling price less the raw materials profit potential. Materials were NOT OUTSOURCED||Dec||Jan||Feb||Mar||Dec||Jan||Feb||Mar||Estm. Annual Sales – this year
Richard Horne: This is calculating the average annual sales based on the average of the 4 months for CURRENT SALES times 10 (not 12 because were are smoothing out the jump in sales for December for this estimate)
|Estm. Annual Sales – projected sales
Richard Horne: This is the sales increase projections based on the the sales increase % shown in cell N2 and the Estm. Annual Sales for current year
Richard Horne: For this cell, multiply the Dec sales from current year by the projected sales increase. Do this for all Projects Sales cells.
Richard Horne: Q5 Use Sales price * Projected Sales * Warranty Rate
|Distributors||Shipping cost/per bicycle|
|Production Capacity per day (considering equipment and planned labor)|
|Cost to order||Carrying cost (% of Unit cost)|
Richard Horne: For B33, use the value from your calculation in P7 and then divide by 360 for average per day
|Reorder time from supplier/days||Unit cost||ROP FOR BRAKE PADS
Richard Horne: Q13: For E33, use the below cell to calculate the ROP based on the cell values in B33 and C33 and roundup the value.
|EOQ FOR BRAKE PADS
Richard Horne: Q14 For I34, calculating EOQ for the brake pads.
|Richard Horne: Question 3||Brake pads(takes 4 pads per bicycle)||0
Richard Horne: Must calculate Estm annual sales for Current year in P7 above FIRST. Use 360 days in this case
Richard Horne: Must calculate Estm annual sales for Current year in P7 above FIRST
Richard Horne: Must calculate Estm annual sales for Current year in P7 above FIRST
|Richard Horne: This is the profit calculation of materials before adding the shipping costs. That is, just the selling price less the raw materials profit potential. Materials were NOT OUTSOURCED||Richard Horne: Use this cell and the 2 cells below to calculate the % the Raw Materials – Metals are of the selling price for the 3 types of bicycles||Richard Horne: Use this cell and the 2 cells below to calculate the % the Raw Materials – Metals – Outsourced are of the selling price for the 3 types of bicycles. You will need to compared this with the cell to the left, the in-house cost to produce.||Richard Horne: For this cell, multiply the Dec sales from current year by the projected sales increase. Do this for all Projects Sales cells.||Richard Horne: The stated warrant rates below are based on historic data.||Richard Horne: This is calculating the average annual sales based on the average of the 4 months for CURRENT SALES times 10 (not 12 because were are smoothing out the jump in sales for December for this estimate)||Richard Horne: Q5 Use Sales price * Projected Sales * Warranty Rate||Richard Horne: This is the sales increase projections based on the the sales increase % shown in cell N2 and the Estm. Annual Sales for current year||Richard Horne: For B33, use the value from your calculation in P7 and then divide by 360 for average per day||Richard Horne: Must calculate Estm annual sales for Current year in P7 above FIRST. Use 360 days in this case||Avg. pads per year||0
Richard Horne: Must calculate Estm annual sales for Current year in P7 above FIRST
|Richard Horne: Q13: For E33, use the below cell to calculate the ROP based on the cell values in B33 and C33 and roundup the value.||Richard Horne: Must calculate Estm annual sales for Current year in P7 above FIRST||EXAMPLE FORMULA FOR ECONOMIC ORDER QUANTITY|
|Where Annual carrying cost = the Carrying costs % * unit cost|
|Components Sets Data||EXAMPLE FORMULA FOR EPQ|
|Estm. Annual Demand||13000||Anl Demand||10000|
|Set-up costs for component sets||$22.00||Setup||100|
|Annual holding cost per set||$3.00||Holding cost||0.5|
|Production days per year||250||Daily Demand||60|
|Productions rate per day||300||Daily Production rate||80|
The purpose of this case study is to apply a number of the key concepts covered in the course textbook to a notional business case. Consider yourself the supply chain manager (SCM) for this company. In this position, you work closely with the plant production manager to support the production schedule. The production schedule is updated every quarter based on the latest sales estimates from the marketing department. You also work with the purchasing department regularly for reorder of raw materials from various suppliers. Another one of your key responsibilities is that you manage the warehouse, so you are responsible for the efficient use of the limited warehouse space that you do have. You must maintain sufficient inventory to ensure that there are no work stoppages because of stock outages. As the SCM, you are also responsible for outbound transportation and finding economical means to ship finished goods in a timely manner. In view of your wide range of responsibilities as the SCM, you play a vital role in the profitability of your company.
Company background: Acme Bicycle Company is a medium-size bicycle manufacturer located in Wichita, KS. It specializes in “theme” bicycles for children and teenagers. The themes include princesses from fairytales and animals, which are popular with girls, and aliens, robots, and sports heroes, which are popular with boys. As such, Acme Co. routinely produces its bicycles in small batch sizes to follow the latest popular trends with its children and teenager customer base. This also ensures that the company will not be left with unsold bicycles that are out of style with its customer base. The following is a summary of Acme Co.:
Product lines: At any one time, Acme Co. is likely to be in the process of producing three different types of bicycles based on market demand projections and current finished goods inventory levels. Additionally, the profit levels of each of the bicycles vary, and at times, the production of higher-profit bicycles takes precedence over lower-profit bicycles based on production and material capacities and production constraints of the labor force and production machinery. Specific information on production and transportation costs and the sales price of the bicycle product line are given in the case study data sheet. For purposes of this case, unit profit for each bicycle is calculated by subtracting the production and transportation costs from the sales price.
Production line: To construct a bicycle, the Acme Co. production line has consolidated and streamlined its production process so that bicycle building can be accomplished in three segments on the production line. These segments are the Metal Shop for initial molding and shaping of the metal parts, the Components shop for the building of component sets, which include the seats, tires, and accessories for each unique bicycle, and the Final Assembly shop for the assembly of all the components together, the final inspection, and testing. Due to the nature of the work in the three production segments, each segment has a different capacity level of how many bicycles it can produce in a normal workday. Acme’s normal production is 40 production hours a week to cover production requirements for most of the year. Production occurs Monday through Friday, and the work hours of the production crew are designed such that some workers come in early to start up the assembly line and some workers come in later to close down the assembly line. Lunch breaks are staggered such that some work is being done throughout the entire 8-hour production shift. However, during peak demand periods, such as the Christmas season, Acme Co. can begin overtime production for up to 12 hours per day for limited periods. Naturally, this overtime will result in higher labor costs, which will decrease profit, so overtime is used only sparingly.
Components Workshop: For each bicycle, the Components Workshop must build a components set for each of the different types of bicycles produced in the assembly line. Production must ensure that there are sufficient component sets built to support production, so part of the SCM’s job is to ensure that the Components Workshop production is adequate throughout the production cycle.
Inventory Management: In order to minimize overall cost of inventory, Acme Co. practices just-in-time inventory on the production line to the greatest extent possible. However, there is a requirement for a warehouse at the production location to ensure a continuation of operations in the event of production variation. This warehouse space is limited in capacity in order to minimize the carrying costs of inventory and help prevent the possibility of having obsolete stock. Acme Co. orders its parts using the economic order quantity called for by the purchasing department.
Suppliers: Acme has been in business for over a decade and now has established purchasing relationships with several key suppliers of the raw materials such as metal, rubber, plastics, and so on. Since Acme’s production levels vary greatly throughout the year, its ordering levels vary greatly as well.
Distributors: Acme does not retail its bicycles directly to the public but ships to two different wholesalers that have distribution centers in the geographic region. One is located in Denver, CO, and the other is in Omaha, NE. The shipping costs for each of these wholesalers’ locations differ, and this amount affects the profitability of the final sale. It is important to consider the shipping costs, as this greatly affects profitability, and the plant accountant is concerned about the rising costs of shipping. Data for calculating shipping costs is given in the case study data sheet. The SCM must provide accurate estimates of shipping costs to the plant accountant to ensure sufficient cash flow to cover operating expenses.
Product support: Acme Co. prides itself on having a very durable product, and each bicycle comes with a limited warranty for 1 year from date of purchase. In order to support this warranty policy, Acme Co. maintains a set-aside amount of capital to honor warranty claims by way of a warranty liability account. This set-aside is based on the historical failure rates and the sales within the warranty period. The plant accountant must ensure that the right amount of money is available in the warranty liability account. If the amount is too small, Acme Co. will not be able to honor its warranty commitments to its customers. However, since the warranty liability account must be kept in a very liquid form in order to cover the variances of honoring warranties, this amount accrues very little interest and could make much greater interest for the company if the money were used for other purposes. Data needed for calculating the amount of the warranty liability is given in the case study data sheet. The amount of the liability is based on the production costs for the estimated percentage of warranty claims, for each type of bicycle, plus the average transportation costs of the two distributors, for that same number of bicycles.
Case Analysis Scenario and Questions
You are an SCM for Acme Co., and the plant director wants to ensure that there will be sufficient logistic support for the anticipated production schedule. A key question for the plant director is “Will I be able to meet the production requirement of the anticipated market demand given my capacity?” The plant accountant is also concerned about profit given the rising cost of materials and shipping costs. Some of the key questions on the plant accountant’s mind are “What will this production run cost so that I can ensure that we have adequate cash flows?” and “What will our profit be given our product mix and shipping costs?” Use the accompanying case study data sheet for the underlying data. In order to answer their concerns, answer the following questions:
1. Senior management feels that the company can expand further in the market but that its sales force needs to focus on more than just taking orders from the customers. The customer service representatives must understand the bigger picture of the service outputs that their firm provides for their customers. Identify the four key service outputs associated with the supply chain, and describe them in relation to this company.
The four key service outputs are spatial convenience, lot size, waiting time and product assortment. Spatial convenience refers to how much effort one will have to spend shopping for a product. Lot size is how much one can purchase of the unit. The waiting time is how much one would have to wait to receive the bike. Product assortment is a variation of the product in this case how many different types of bikes one can purchase.
2. As the supply chain manager, your task is to integrate the many functions within the field of logistics into a cohesive, effective, and efficient operation. However, in order to do this, you must keep in mind the objectives of logistics integration in the first place. Identify and describe the six key objectives of logistics integration.
The six key objectives of logistics integration are responsiveness, shipment consolidation, life cycle support, quality, variance reduction and inventory reduction.
3. The accountant was going over last fiscal year's sales to calculate profit and is interested in December through March. In February and March, backorder spare parts necessitated that the metals were outsourced. What was the pre-shipping profit for those months?
December’s profits were $132,500, January was $44,750, February was $48, 260 and March was $45,720.
4. Calculate the projected transportation costs for the firm for next year. Assume that the products were shipped in equal amounts to the two distributors. Assume also that the average sales for the four months given will be the average for the entire year.
These projected costs would be $41,040.
5. All sales that are covered under a warranty require the firm to keep a certain level of cash for warranty liability or reserves. This is based on the sales and percentage of the products estimated to fail. What is the warranty liability for all the bicycles estimated to be sold during next December?
The warranty liability of all the bicycles estimated to be sold until next December is $826.58.
6. The marketing director stated that the distributor in Colorado got a call for 150 Scorpion bicycles last month. There were 30 Scorpions in transit. They had 110 on the shelf to sell. What was the fill rate for that item at that location?
The fill rate for that item at that location would be 92%.
7. A logistics manager must consider various factors before deciding on what mode of transportation to use. What are the five factors to consider before making this decision?
The five factors to consider when making this decision are weight, distance, cost and market and handling and density.
8. Senior management is considering building a new warehouse, but they are not familiar with the various means to design a warehouse for basic handling considerations. Define and describe the four basic designs for package handling for senior management.
These four basic designs are automated, information-directed, semiautomated and mechanized. Automated used computerized functions to pack and pull these items. Information-directed material handlers include RFID. Semiautomated handling include robotic pulling. Mechanized handling included conveyor rollers or forklifts.
9. You notice that the inventory of metals is being consumed more rapidly than planned. If you run short of the metal stock, you can order your metals from your outsource supplier. For which of the three bicycle types would you outsource the metals as a last resort and why?
When considering which of the bicycle types to outsource one would outsource the metal as only a last resort due to it having the highest cost when looking at the other two.
10. Due to a snowstorm in the region, incoming supplies are in danger of exhausting the current inventory. If supplies got low, which product would you first cut production on so as to conserve your inventory? What would be your last product to cut? How would you make that decision?
Due to a snowstorm, I would consider cutting the Princess Lea bicycle first because it is the one with the lowest selling price. The last to cut I would choose the Robo bicycle because it has the highest source of revenue.
11. You just received the production plan for December through March, based on the sales projections. Do you see any problems with this production schedule? Assume that the current inventory will be exhausted by the end of the month.
The production plan should be able to meet the demand of the market. Although, one may have to slightly increase the production to replenish the inventory that may be exhausted within the process. Overall, there are not issues meeting these sales projections.
12. One of the key indicators of success in inventory management is inventory turn. Calculate the inventory turn for the front safety reflectors (each bike has one). The average annual sales have been 5,500, and the average inventory level for the reflectors has been 500.
The calculated inventory return is 11.
13. Stockouts are a serious concern for all inventory managers. In order to prevent stockouts, each item in the inventory has a reorder point. Calculate the reorder point for the brake pads.
Once this item reaches 710 available units the brake pads should be reordered.
14. There is a cost to the ordering process and determining the quantity to order each time requires that several factors are taken into consideration. Determine the EOQ for the brake pads.
The EOQ for the brake pads would be $18,084.25.
15. Selecting a proper order selection method is an essential first step for a warehouse manager. If Acme Co. wanted to ensure it segregated its finished goods inventory for its specific customers, what order selection technique should it use?
I would choose discrete selection. When one chooses this technique, it gives one the opportunity to select and prepare the shipment as the work assignment.
16. The Components Workshop is reconsidering its batch sizing. It wants to estimate the best lot size for the upcoming production year. The estimate for the annual demand will be based on 9 times the average of the 4 months of the Projected Sales in the Data Sheet, due to the exceptionally high demand in December. What is EPQ for the upcoming year's production run? (Use the video Production Planning: EPQ Example to assist you with completing this problem).
The EQP is 4000.
QSO 322 Final Project Guidelines and Rubric
Overview A detailed foundational knowledge of logistics management is essential to a successful logistics career. Companies want emplo yees to be able to assess existing processes and practices, but also to improve these processes to cut costs and meet deadlines. Your assessment for this course is a report or presentation with detailed speaker notes or a recording using a tool such as Jing, detailing your analysis and including foundational recommendations for an existing company’s logistics framework. This report will focus on one organization and will be broken up into several sections to give attention to the key areas of logistics management. Throughout this course, you will have the opportunity to receive feedback from your instructor to help you achiev e a successful final submission of your evaluation report.
The project is supported by a milestone, consisting of 16 questions directly related to each critical element of your final case study submission. This milestone will be submitted in Module Five. The final submission will occur in Module Seven.
In this assignment you will demonstrate your mastery of the following course outcomes:
Calculate costs and production needs based on analysis of organizational logistic needs assessments and customer requirements
Identify company logistics, capacity planning, and resource needs by applying foundational qualitative and quantitative analysis methods
Propose foundational methods for integrating logistic delivery systems into a cohesive, lean delivery system to satisfy customer demand at least cost Analyze variable demand cycles, carrying costs, customer preferences, and just-in-time principles for successful inventory management Evaluate the efficiency and effectiveness of physical distribution systems for receiving, storing, and shipping raw goods and finished products
Prompt Your needs assessment and improvement proposal should answer the following prompt: Given the organization, products, and specifications provided in the Acme Bicycle case study, what are the logistics needs and what suggestions can you make for improving aspects of the framework?
Specifically, the following critical elements must be addressed:
I. Needs and Scenario Assessment A. Assess customer logistics support needs for a product line.
1. Scenario Background: Analyze the logistic support needs of an external customer given their own production requirements and considering time, cost, and quantity of materials needed. What are the key elements, such as product requirements, provided in the scenario that are essential for determining the logistic support needs of the organization? What are the needs of the organization?
2. Sourcing Alternatives: Given required logistic support, calculate the costs for in-house and outsourced production of goods for the demand cycle. What would be a best package solution that considers in-house capabilities and outsourced alternatives that would allow for least cost, given your results?
3. Post-Sale Support/Reverse Logistics Needs: Calculate the estimated warranty costs for a product and explain what the costs mean for the company. Something to consider in the explanation is support needed to customers post-sale to plan post-sale support, replacement, and discontinuation of products. For these, you will need to estimate the failure rates from the scenario.
B. Assess company capacity and approaches in order to satisfy needs. 1. Capacity Constraints: Given customer requirements and sourcing mix, identify specific capacity constraints in production. You will need
to figure out the known capacity in view of project demand to do this successfully. 2. Product Positioning: Develop a plan for positioning finished goods to ensure ease of delivery and convenience, while also attending to
resource needs and capacity constraints. 3. Materials Requirements Planning: Given the required rate of production and plant capacity, create a material requirements plan to
successfully fulfill customer and logistics needs identified in the scenario and during your analysis of the case. Your plan should be simple, focusing only on the needs identified and your plan to ensure you are meeting material requirements.
II. Optimization Proposal A. Recognize and apply logistics management techniques given internal capabilities.
1. Production Plan Creation: Given the set of production requirements for one item, determine optimal batch size (the best size or number of products per batch that you will create in a given set to meet production requirements) for a product considering the set-up time and calculated demand patterns.
2. Production and Stockage Alternatives: Considering the required output for the product line, develop a single solution or mix of make- to-stock, make-to-order, or make-to-engineer methods to fulfill projected demand.
3. Profit Potential: Given the set of costs and selling prices, determine and explain the optimal mix of two products a company could produce given the capacity constraints you identified previously.
B. Manage sourcing and inventory to minimize costs.
1. Inventory Levels: Determine inventory levels of three products to minimize costs while considering the production schedule and projected sales. In other words, what would be the best number of each product to have on hand to meet projected sales while not wasting money on extra storage of unsold goods?
2. Inventory Management Evaluation: Discuss the effectiveness and efficiency of the inventory management process, considering key metrics such as inventory turn rate, stock outages, and carrying costs for three products.
3. Planning for Inventories: Based on historic and projected data, determine the likely inventory position for three products that balances the need to minimize costs with avoiding stock outages. In other words, calculate and explain the significance of not-in-stock rates for three products, based on product and demand schedules.
4. Just-in-Time (JIT) Inventory: For the given inventory consumption patterns, determine an opportunity to use JIT inventory techniques to reduce warehouse needs while not starving production capacity. In other words, calculate JIT inventory needs for a segment of a production line for a single day.
C. Manage a physical distribution system to minimize costs. 1. Physical Distribution Process: Based on the inventory requirements, develop a physical distribution process for the company that is
focused on necessary square footage of warehouse space for given inventory levels. 2. Warehousing Effectiveness: Given the set of required inventory, evaluate the effectiveness of the warehouse operations using key
metrics (that you will choose). Be sure to consider the following in your calculations of key metrics: receipt of raw goods, stowing, shipping, and warehouse relocation.
3. Shipping Management to Minimize Costs: Develop a plan to deliver finished goods to customers within given shipping requirements for three products while minimizing costs.
4. Warehousing Utilization: For the required inventory, determine the effectiveness of warehouse utilization for the inventory. Your evaluation of warehouse utilizations should include calculating space utilization rates for commodities.
Milestone: Acme Bicycle Case Study Questions
In Module Five, you will submit answers to 16 questions related to the Acme Bicycle case study. Answering the 16 questions will assist you in completing your final project case study, due in Module Seven. Answer the questions as completely as possible to prepare yourself for the final case study. Each question identifies the critical element of the final project to which it is related. Review the case study questions, and review their alignment w
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