QSO 322 Final Project Guidelines and Rubric

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A detailed foundational knowledge of logistics management is essential to a successful logistics career. Companies want employees 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 achieve a successful final submission of your evaluation report.

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NOTICE: HOVER OVER CELLS WITH RED INDICATOR SYMBOLS IN UPPER RIGHT CORNER TO READ IMPORTANT COMMENTS Production Costs Bicycle types Scorpion Princess Lea Robo-Bike Current Sales Year Raw Materials - Raw Raw metals - Materials Materials - Oursource Compone Metals d nts $25 $29 $30 $18 $22 Selling Price $95 Dec 750 Jan 250 Feb 300 825 875 275 300 320 325 $20 $24 $20 $28 $88 $120 Production Capacity per day Dec Jan Feb Mar Metal Shop 900 300 350 325 Components Final Assembly 900 300 350 325 900 300 350 325 Cost to order Carrying cost (% of Unit cost) $12 0.15 Shipping Costs Shipping cost/per Distributors bicycle Omaha $25 Denver $35 Parts Ordering Part Reorder time from Avg supplier/d Use/day ays Unit cost ROP FOR BRAKE PADS EOQ FOR BRAKE PADS Brake pads(takes 4 pads per bicycle) Avg. pads per year 0 5 0 $1.25 0 0 EXAMPLE FORMULA FOR ECONOMIC ORD Where Annual carrying cost = Component s Sets Data Estm. Annual Demand Set-up costs for component sets Annual holding cost per set Production days per year Productions rate per day EXAMPLE FORMULA FOR EPQ 13000 Anl Demand $22.00 Setup 100 Holding cost 0.5 $3.00 250 300 Daily Demand Daily Productio n rate EPQ 10000 60 80 4000 READ IMPORTANT COMMENTS Sales Year Projected Sales 0.07 Warranty Rate Estm. Estm. Annual Annual Sales Sales - this projected year sales Mar 275 Dec 803 Jan 268 Feb 321 Mar 294 0.03 300 315 883 936 294 321 342 348 321 337 0.01 0.02 0 Warranty Liability EOQ FOR BRAKE PADS 0 ORMULA FOR ECONOMIC ORDER QUANTITY Where Annual carrying cost = the Carrying costs % * unit cost FORMULA FOR EPQ =SQRT(((2*10000*100))/(0.5*(1-60/80))) QSO 322 Acme Bicycle Case Study 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. 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. 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? 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. 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? 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? 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? 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. 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? 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? 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. 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. 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. 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. 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? 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). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 CASE QUESTIONS 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. 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 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? 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. 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 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? 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? 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. 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? 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? 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. 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. 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. 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. 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? 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). Chap Week Critical Element 3 1 IA1 2 2 IA1 8 2 IA2 8 2 I B 2, II C 3 13 1 IA3 3 1 II B 3 8 2 II C 3 10 6 II C 4 4 3 II A 2 5 4 II A 3 5 4 I B 1, I B 3 7 6 II B 2, II C 2 7 6 II B 4 7 6 II B 1 9 6 II C 1 5 5 II A 1 QSO 322 Final Project Guidelines and Rubric Overview A detailed foundational knowledge of logistics management is essential to a successful logistics career. Companies want employees 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 achieve 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 ...
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Running Head: LOGISTIC ANALYSIS: ACME BICYCLE CASE STUDY

Logistic Analysis: ACME Bicycle Case Study
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1

LOGISTIC ANALYSIS: ACME BICYCLE CASE STUDY 2
I. Needs and Scenario Assessment
A. Assess customer logistics support needs for a product line.
1. Scenario Background:
The logistic support needs for an external customer will depend on their own production
requirements, material requirement, cost and time of production. The key elements essential for
ascertaining the logistic support requirement of the organization include the delivery duration
where the organizations would be forced to minimize the duration of supplying the two
customers (Feng & Kiely, 2018). Thus, the company should take the shortest time possible to
deliver the supplies to the two customers to increase utility.
2. Sourcing Alternatives:
From the required logistic support, it is evident that the costs associated with the in-house
and outsourced production bicycles for the demand cycle are $230. Form this cost, the best
package solution in regard to the in-house capabilities and outsourced alternatives is routing
(Sze, Sek, Chiew & Tiong, 2017). Implementing alternative routing package would allow the
organization to use the least cost, where the organization would be required to identify better
routing options to save on cost and time. Tracking is also an element for the logistic support that
would force the organization to keep its supplies on constant monitoring to increase quality
control.
3. Post-Sale Support/Reverse Logistics Needs:
From the case scenario provided, the estimated warranty costs for An ACME Bicycle
product is 2 years. This warranty cost means that the organization will spend extra finances in
replacing and repairing faulty and defective bicycles on a frequent basis. Therefore, there is a
need for the company to implement post-sale support and reverse the logistic need for the

LOGISTIC ANALYSIS: ACME BICYCLE CASE STUDY 3
customers such as minimization of damage to the supplies. Consequently, the organization will
need to minimize the damage on supplies so that they reach the customers in good condition
(Fanti, Iac...

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