Background: Customer ABC is evaluating various supply chain strategies for their
ID: 2716502 • Letter: B
Question
Background:
Customer ABC is evaluating various supply chain strategies for their next generation server product for the US Market. Their current manufacturing location is based in Columbus, Ohio. The Columbus facility makes all the components and final configuration/assembly of the server. The end customer points are the top 4 locations (states) in the US by Population. The annual volume of demand for this server product in the US is estimated to be 50K units. The product flows directly from Columbus to the end customer locations. The mode of transport in general is FTL with 5% of the product shipments expedited via Air. BOM Structure# The BOM of the server product is composed of the following components: 2 PCBA's Power Supply Unit Chassis Backplane Fan Tray Alternative Scenarios# The customer has expressed interest in setting up an alternative manufacturing facility either in Guadalajara, Mexico or Zhuhai China. With the proposed Guadalajara solution, the split in regular/expedited shipments will be the same as in the case of shipments from the Columbus facility to US customers. With the proposed Zhuhai solution, there is to be a DC located in Fontana, California where product is warehoused before being shipped to final end customer locations. The amount of inventory held in the Fontana DC facility is 21 DOI to cover for transit time of shipments from China. It is estimated that 10% of shipments from China will need to be expedited and 10% of shipments out of the Fontana DC are expedited as well. All manufacturing facilities are to hold 2 weeks’ worth of components in inventory. No FG inventory is held in any of the locations apart from the DC in Fontana.
Product Properties
Material & Value Added Costs
Fixed Costs of Sites
Warehousing Costs:
Use the SimFlex Lite tool to evaluate the trade-offs among the proposed supply chains. Where would you locate the manufacturing facility—Columbus, Guadalajara, or Zhuhai? Provide a brief report with supporting tables to justify your choice.
****Please show what was used for the production cost for all 3.
Product Inventory Value (USD) Weight (lbs) Items Per Pallet Server 12,000 153 4 Chassis 750 100 8 PCBA 4,000 5 120 Blackplane 800 25 20 PSU 200 8 80 Fan Tray 250 10 48Explanation / Answer
Ans: Analysis from SimFlex
Ans: Analysis from SimFlex
Product Properties Items Per Storage Unit Weight (kg) Weight (lbs) Backplane 20 11,34 kg 25,0 lbs Chassis 8 45,36 kg 100,0 lbs Fan Tray 48 4,54 kg 10,0 lbs PCBA 120 2,27 kg 5,0 lbs PSU 80 3,63 kg 8,0 lbs Server 4 69,4 kg 153,0 lbs Demand by Customer Demand by Customer (product items) Total Demand 30K California 10K Texas 7K New York 5K Florida 5K Illinois 3K 0K 2K 4K 6K 8K 10K Total Costs Total Cost Comparison Current State China Guad $0 $100M $200M $300M $400M Material costs VAM Costs Fixed costs Logistics Costs Current State China Guad Material costs $263.5M $260.0M $262.0M VAM Costs $87.5M $66.1M $70.3M Fixed costs $1.2M $1.3M $1.1M Logistics Costs $2.7M $12.5M $3.3M a. Warehousing Costs $36.8K b. Inventory Costs $2.1M $10.7M $2.2M c. Transportation Costs $652.4K $1.8M $1.1M TOTAL COST $354.9M $339.9M $336.7M Difference vs. Current ($) $-15.0M $-18.2M Difference vs. Current (%) -4.20% -5.10%Related Questions
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