Supply Chain Management

Supply chain management is the integration of activities that procure materials and services, transform them into intermediate goods and final products, and deliver them to customers. The production, distribution, and sale of both goods and services are bound by constraints in demand, supply, capacity, capability, and a myriad of other parameters.

In this assignment, consider the strategic implications of how an organization produces and interacts with its partners, customers, and suppliers.

Using the module readings, Argosy University online library resources, and the Internet, research supply chain management processes. Based on your research, complete the following:

• Describe the overall goal of a supply chain.
• Describe the difference between a supply that is responsive (service) and a supply chain that is efficient. Can a supply chain be both?
• How can an organization optimize supply chain management to improve results and remove obstacles? Support your answer with two current examples.
• Based on your learning from your research, what additional recommendations might add to what was accomplished?

Write a 3–5-page paper in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M4_A2.doc.

By Wednesday, November 5, 2014, deliver your assignment to the M4: Assignment 2 Dropbox.

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Operations Management

Order Description

Scenario: Smitheford Pharmaceuticals is facing other issues. The company had not kept up with modern manufacturing technology and was in the process of modernizing the injectable manufacturing facilities in Pueblo and Colorado Springs. There were several modernizing scenarios under analysis. Perform cost-benefit analysis calculations for 2 equipment scenarios. The data are provided below.

Scheduling the various manufacturing operations has become more complicated. In the 1990s, the Pueblo plant expanded tremendously, based on forecasts for the growth of a promising osteoporosis medication, Osto54. The facility doubled in size, mostly with tanks and processing equipment. Osto54, however, caused heightened enzyme levels in the liver and led to seven deaths in the elderly because of drug interactions. Smitheford faced the loss of millions of dollars in liability suits and had excess intermediate manufacturing capacity in Pueblo.

Two years ago, a new immune system treatment, Ultamyacin, was discovered by a Smitheford researcher. The drug could be manufactured at the Pueblo facility for the bulk manufacturing, but the final manufacturing steps could be made in Puerto Rico for final purification and then sent to Fort Collins for final manufacturing into sterile bottles for injection.

Smitheford leadership has narrowed the decision making down to 2 options. The first is a higher technology option in one location, and the other is a lower technology option in several locations.

High Technology
Centralized Location Low Technology
Decentralized
Annual Fixed Cost $620,000 $110,000
Variable Cost/Product 16.31 18.89
Estimated Annual Production

(in number of products) Year 1 100,000 100,000
Year 5 170,000 170,000
Year 10 225,000 225,000
Use applicable business formulas to determine costs for both options.

Consider the following questions:

Which is the lead cost alternative in Years 1, 5, and 10?
How much would the variable cost per unit have to be in Year 5 for the automated alternative to justify the additional annual fixed cost of the automated alternative over the manual alternative?
Determine what other factors should be considered when deciding the following:
When to centralize manufacturing
When to opt for higher technology options

Operations Management

Order Description

Scenario: Smitheford Pharmaceuticals is facing other issues. The company had not kept up with modern manufacturing technology and was in the process of modernizing the injectable manufacturing facilities in Pueblo and Colorado Springs. There were several modernizing scenarios under analysis. Perform cost-benefit analysis calculations for 2 equipment scenarios. The data are provided below.

Scheduling the various manufacturing operations has become more complicated. In the 1990s, the Pueblo plant expanded tremendously, based on forecasts for the growth of a promising osteoporosis medication, Osto54. The facility doubled in size, mostly with tanks and processing equipment. Osto54, however, caused heightened enzyme levels in the liver and led to seven deaths in the elderly because of drug interactions. Smitheford faced the loss of millions of dollars in liability suits and had excess intermediate manufacturing capacity in Pueblo.

Two years ago, a new immune system treatment, Ultamyacin, was discovered by a Smitheford researcher. The drug could be manufactured at the Pueblo facility for the bulk manufacturing, but the final manufacturing steps could be made in Puerto Rico for final purification and then sent to Fort Collins for final manufacturing into sterile bottles for injection.

Smitheford leadership has narrowed the decision making down to 2 options. The first is a higher technology option in one location, and the other is a lower technology option in several locations.

High Technology
Centralized Location Low Technology
Decentralized
Annual Fixed Cost $620,000 $110,000
Variable Cost/Product 16.31 18.89
Estimated Annual Production

(in number of products) Year 1 100,000 100,000
Year 5 170,000 170,000
Year 10 225,000 225,000
Use applicable business formulas to determine costs for both options.

Consider the following questions:

Which is the lead cost alternative in Years 1, 5, and 10?
How much would the variable cost per unit have to be in Year 5 for the automated alternative to justify the additional annual fixed cost of the automated alternative over the manual alternative?
Determine what other factors should be considered when deciding the following:
When to centralize manufacturing
When to opt for higher technology options