Suppy chain management. Mathematics & Economics Coursework

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Question 1
How service level, uncertainty, safety stock and order quantity relate to each other and the trade-offs between these elements
The vital factor with regards to service level delivery entails speed and availability, that is, anyone placing an order needs it soonest possible and they should be informed that it is there in stock. This factor is influenced by uncertainty in demand and cycles to replenish. Safety stocks would help to maximize on availability and certainty in levels of service within the network. Safety stocks increase would increase on inventory holding costs and whole cost (Zahraei, Seyed Mehdi & Chee-Chong Teo, 79). Trade-offs may be made through large order submission and eliminate safety stocks and keeping close communication with both suppliers and customers to reduce uncertainty.
Question 2
Transport principles and creation of efficient transportation
These have been created to enhance high integrity and standards in the transportation system. Holding the fact that economy of scale gears to reduce on the transportation system’s costs; these principles would allow for the formation of an effective and efficient manner of transportation. Process to transport huge quantities of good for longer distances is likely to save a substantial chunk of money because fixed costs get attributed to transportation and later shared across the whole shipment. This would help to improve on transport activity productivity and lower costs on logistics.
Question 3
Conditions necessary for private and public warehouses combination in a logistical arrangement
Introduction of a warehousing contract which is a tailored extension of public warehousing brings together public and private warehouses. This forms a long-term trade arrangement hence offering specially customized services to a range of specified customers. Risks attached to warehouse operations get shared between the clients and the operator. It would be sensible and logical to merge both private and public warehouses to enable more warehouse capacity utilization (Mangan, John &Chandra, nd). Having a warehouse getting fully utilized is an erratic scenario and therefore, a usual warehouse will have occupation of between 75% and 85%. The remaining 15% to 25% will not be utilized until there is a peak requirement which is when it makes sense to combine warehouses.
Economic justification of a warehouse establishment
Warehouses get warranted in a logistical arrangement when a system and or cost benefit arises from their position that is amid the customers, producers and the suppliers. Such competitive advantage generated by warehouse network establishment sparks from low total costs and quick deliveries. On another view of transportation, warehouse may be used to attain freight consolidation though the assortment may require stock to offer assembly to tailored orders. Other business activities will justify the need to combine inventory storage and flow through operations to serve customers effectively and economically.
Question 4
Logistic considerations in operating in global environment
The first requirement is the requirement on the use of multiple languages applicable to both the products produced and documentation. Products should bear characteristics and features on them and their specific manuals and usage guides. Language differences impose complexity and products may become limited to a specific geographical region if language-customized. A second consideration is the distinctive national accommodations of performance features, technical, safety and environmental requirements. These have general elements of functionality of products, documentation, power supplies, chemicals, documentation and possible shut-offs. Little of these differences between countries’ necessities may surge influencing operations and supply chains.
The third consideration focuses on the amount of documentation critical for global operations. A local operation may depend on a simple invoice for documentation purposes while a global will need a substantial documentation to support order transportation, financing, control of government and general contents (Sinha & Deepankar, nd). The last consideration is on the counter-trade incidences and challenges with duty applicable from one boundary to the other. Counter-trades will be affected by means of payments while duty will entail the exchanges occurring during importation and exportation.
Justification and encounters allied to sourcing from low-cost countries
Justification for low-cost-country sourcing will include; first is the reduction in the manufacturing costs though firms may neglect the costs associated with transportation logistics. The second rationale is the increased competitive pressure to domestic suppliers resulting from suppliers sought in low-cost countries. This has an effect of increasing the probable sources of supply. Thirdly is the likely exposure to advanced technologies on merchandises and processes. Global suppliers put pressure on domestics ones to do research on new technologies something which improves on the competitive position of a firm. Lastly, a firm would be able to establish local presence and give it an opportunity to sale in an international country.
The challenges associated with low-cost-country sourcing include: first, a firm may not find it easy to trace and identify a supply source with the required quantity and quality. The second difficult is on the shield on a firm’s intellectual property rights during the production and transportation. Trading nations or firms should ensure there are legal measures in place to offer sufficient protection. Third challenge relate to compliance issues on imports and exports. The forth challenge is communication tailored. A firm may find it hard to get in touch with freight forwarders, carriers and government custom due to language barriers, time zones and technological differences (Moser, Roger, et al, 41). A fifth challenge is security while goods are on transit. Sixth challenge touches on obsolescence and due to longer transit timelines and lastly is the difficulty in differentiating between a piece and a total cost.
Question 5
Part a
The economic order quantity is given by: √[(2 x demand x ordering costs) ÷ carrying costs]
EOQ = ٧2*Co*D/Ho
= 2*$80*44,000/ (0.3*$45)
= ٧521,481.48
= 722 units
Part b (i) EOQ
EOQ = ٧2*Co*D/Ho
= 2*$5*1000/$4
= ٧2,500
= 50 units
(ii) Total ordering cost for a year
= D/Q* Co = 1,000/50 * $5 = $100
(iii) Storage costs for a year
This is holding costs (H) = Q/2*Ho = 50/2 * 4 = $100
Question 6
Actual Sales – A, Forecast – F
Absolute % Error = / (F-A)/A/
N = number of observations = equivalent to number of days = 16
Mean Error = 1/ni=116(Fi-Ai)
This information helps to fill table below as seen;
Days

Sales (A)

Forecast (F)

Error(F-A)

Absolute Error(/F-A/)

Square Error(F-A)^2

Absolute % Error

1

328

326

-2

2

4

0.0061

2

310

337

27

27

729

0.0871

3

355

348

-7

7

49

0.0197

4

362

359

-3

3

9

0.0083

5

375

369

-6

6

36

0.0160

6

380

380

0

0

0

0.0000

7

408

391

-17

17

289

0.0417

8

415

401

-14

14

196

0.0337

9

417

412

-5

5

25

0.0120

10

412

423