Essays on MS Solver Software Required: Logistics And Supply Chain Strategy:Individual Quantitative Case Math Problem

Download full paperFile format: .doc, available for editing

Other factors 9Conclusion List of Figures and tables Table 1: Transportation costTable 2: production costTable 3: Import dutiesTable 4: Highcal ProductionTable 5: Relax ProductionTable 6: Total Plant OutputTable 7: excel file Background Biopharma Inc. is a company specialised in the manufacture of chemicals in bulk that are used in the production of drugs by pharmaceuticals. The company has plants across the world producing two chemicals Highcal and relax. The plants of the company can produce either the product. The costs of the company have gone up reducing the profitability, however the company projects that the demand for its products remains constant.

Plants in Germany and Japan are seen as having high costs a compared to other plants. Therefore the company has taken cutting cost as top priority. The company intends to maintain 100% capacity in any plant which is not idled. Any plant that is let without production should be shut down because it will continue to incur fixed cost for the plant and 20% fixed cost for production. The sales are assumed to be the demand for the period. Objectives The main objective of the report is to provide information to the company on the best method of cutting costs having the most efficient supply network.

Current Situation Currently the company is producing two products which incur some costs. The costs of production include; plant fixed cost, fixed costs associated with each product, raw materials and production costs. There is also a cost associated with transport of the finished products. These costs have been analysed in table 1,2,and 3 below. Table 1: Transportation costTRANSPOR COST (millions)from/toLatin AmericaEuropeAsiaJapanMexicoUSAtotalBrazil2.800001.84.6German0300003India001.63004.6Japan0000.2000.2Mexico03.601.351.22.258.4USA000004.44.4Table 1: production costPRODUCTION COSTSPlanthighcalhighcalhighcalhighcalrelaxrelaxrelaxrelaxFCRMprototalFCRMprototalBrazil539.656.1100.75.0032.246.283.4German1358.5105176.514.000014India43645854.00364888Japan67.81528.86.00006Mexico643.260109.26.0082.8117205.8USA51825485.0076.5110.5192Import dutiesPlanthighcalhighcaltransport dutiesrelaxrelaxrelaxRMprocostRMprotransportcostdutiesLatin America00000000Europe00006055.23.63.564Asia00000000Japan1822.51.525.236.349.52.855.319Mexico00000000USA46.865.44.054.650000Currently the import duty is 16.05 million while the production cost was 1162.6 million and plant fixed cost was 151 million totalling to 1330 million.

Analysis has been done using the following variables; Let the number of plants be kLet the demand zones be mLet the demand from annual demand be D Let the factory capacity be presented as CAnnual fixed cost of a factory while open be FCost of production and transporting one unit from one factory to a market be TQuantity produced and shipped to a market be xLet import duty be pyi= 1 { if factory i is open else 0}Z= 0 { if i=j else 1}The objective function is to minimise the cost of production, transportation cost and import duties. ConstraintsThe plants will not produce beyond capacityThe market demand must be satisfied - ∑xi-k=∑Di-M 0Amount shipped should be positive - ∑xi-k 0 Restructure and Exchange ratesThe company should strife to maintain the current distribution network because the exchange rate appears to be fairly stable.

However in case there is change in currency of any country involved, then they should change the supply network.

If there is hike in a currency of a market then the profits of the company will be lowered as well as increase the cost. Reduction in dutiesIf there is reduction in the rate of duty, the cost of total production will go down making a urge profit. The table below shows the impact of reduction

Download full paperFile format: .doc, available for editing
Contact Us