Case Situation in SCM.docx

8/11/2019 Case Situation in SCM.docx

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Case Situation

1. LG Ltd. is a manufacturing of AC that has been its demand grows significantly. The

company anticipates nationwide demand for the year 2012 to be 180,000 units in the West,

120,000 units in the South India, 110,000 units in the North, and 100,000 units in the west

south India. Manager of LG Ltd are designing the manufacturing network and have selected

four potential sites Delhi, Mumbai, Chennai, and Bangalore. Plants could have a capacity

of either 200,000 to 400,000 units. The annual fixed costs at the four locations are shown in

table along with the cost of producing and shipping an AC to each of the four markets.Where should LG build its factories and how large should they be?

Delhi Mumbai Chennai Bangalore

Annual fixed costof 200,000 plant

$6 Million $5.5 Million $5.6Million $6.1 Million

Annual fixed costof 400,000 plant

$10 Million $9.2 million $9.3Million $10.2Million

South 211 232 238 299West 232 212 230 280East 240 230 215 270

North 300 280 270 225

DelhiShipped

fromDelhi

MumbaiShipped

fromMumbai

ChennaiShipped

fromChennai

Bangalore

Shipp

from

Bangal

Fixed Costs

200k$6 Million

$5.5

Million$5.6Million $6.1 Million

400k

$10

Million

$9.2

million$9.3Million $10.2Million

Variable Costs

North 211 110,000 232 - 238 - 299

West 232 - 212 180,000 230 - 280

South 240 - 230 - 215 120,000 270

West-

south 300 - 280 - 270 - 225 100,0


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(a.)Total cost of LG

Delhi Mumbai Chennai Bangalore

Various Cost 23,210,000 38,160,000 25,800,000 22,500,000

Fixed Cost 6,000,000 5,500,000 5,600,000 6,100,000

Total Cost 29,210,000 43,660,000 31,400,000 28,600,000

Total LG Cost 265,740,000

(b) if management want to close Chennai plant than what would you recommended to

management.

(c0) if west market demand increase by 30,000 units than how company supply these units

form exist network and how much cost increase?

2. SC Consulting, a supply chain consulting firm, must decide on the location of its homeoffices. Its clients are located primarily in the 16 states listed in table. There are four potential

sites for home offices: New Delhi, Jaipur, Mumbai, and Pune the annual fixed cost of

locating an office in New Delhi is $165, 428, Jaipur is $ 131, 230, Mumbai is $140,000, and

Pune is $ 145,000. The expected no. of trips to each is Cities and the travel costs from each

potential site are shown in table. Each consultant is expected to take at most 25 trips each

year.

Cites Total # of trips Cost from

Delhi

Cost from

Jaipur

Cost From

Mumbai

Cost from

Pune

40 150 250 200 25

Bangalore 35 150 250 200 75

Noida 100 75 200 150 125

Bhopal 25 150 200 125 125

Lucknow 40 100 200 125 150

Chennai 25 175 175 125 125

Nasik 50 150 175 100 150

Indore 30 150 150 100 200

Gaogoan 50 75 100 200 250

surat 65 150 125 25 250

HY 40 125 125 75 125

Warangal 30 300 200 150 200Goa 20 300 175 125 200

Udaipur 30 250 100 125 250

Ahmadabad 40 250 75 75 300

Ajmer 55 100 25 125 300


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output from Excel

CitesTotal #

of trips

Trips

from

Delhi

Cost

from

Delhi

Trips

from

Jaipur

Cost

from

Jaipur

Trips

from

Mumbai

Cost

From

Mumbai

Trips

from

Pune

Cost

from

Pune

40 - 150 - 250 - 200 40 25

Bangalore 35 - 150 - 250 - 200 35 75

Noida 100 100 75 - 200 - 150 - 125

Bhopal 25 - 150 - 200 - 125 25 125

Lucknow 40 40 100 - 200 - 125 - 150

Chennai 25 - 175 - 175 - 125 25 125

Nasik 50 - 150 - 175 50 100 - 150

Indore 30 - 150 - 150 30 100 - 200

Gurgaon 50 50 75 - 200 - 100 - 250

surat 65 - 150 - 125 65 25 - 250

HY 40 - 125 - 125 40 75 - 300

Warangal 30 - 300 - 200 30 150 - 200

Goa 20 - 300 - 175 20 125 - 200

Udaipur 30 - 250 30 100 - 125 - 250

Ahmadabad 20 - 250 20 75 - 75 - 300

Ajmer 55 - 250 55 25 - 125 - 300

Solution:

(a)Total Trip from Various office

a. Delhi office = 100+40+50 = 190

b. Jaipur Office = 30+20+55 = 105

c. Mumbai office = 50+30+65+40+30+20 = 235

d. Pune office = 40+35+25+25 = 125

(b)How many consultant at various offices

No. of consultant = total no. of trip / no of trip per consultant

a. Delhi office = 190/25 = 7.6 = 8 consultant

b. Jaipur office = 105/25 = 4.02 = 5 consultant

c. Mumbai office = 235 / 25 = 9.4 = 10 consultant

d. Pune office = 125/25 = 5 consultant

Total consultants for SC consulting = 8+5+10+5 = 28


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(c)Total cost of SC consulting

Total office cost = Fixed cost + variable cost

Variable cost = no. of trip * trip cost

Delhi Jaipur Mumbai Pune

# of trips 190 125 235 125

# of Consultants 8 5 10 5

Fixed Cost of office 165,428 131,230 140,000 145,000

Cost of Trips 15,250 7,375 19,625 9,875

Total Office Cost 180,678 138,605 159,625 154,875

Total System Cost 633,783

Total cost of SC Consulting = 180678 + 138605 + 159625 + 154875 = 633783

(d)If SC consulting have only four consultants at Jaipur than what would you solution for

company.

(e) If SC consulting have only 26 consultants that what is your recommendation to

company?

Case Situation in SCM.docx

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