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Applichem Case Study

Applichem Case

OMKRING 888 Supply Chain Building and Research

Applichem

• Produces Release-ease, a specialty chemical • 6 plants that manufacture Release-ease – – – – – – Gary, Indiana Frankfurt, Germany South america Canada Venezuela Japan (Sunchem)

• Competitive Situation

– Applichem sama dengan Market Head, Revenues bucks 75 Mil (1982)

• Main competitor has one particular large herb

What is the aim?

– Minimize cost?

• What costs?

– Transport – Manufacturing – Set versus variable?

• Exactly what are appropriate actions?

– Tips on how to incorporate exchange rate adjustments? – Think about different sizes and capabilities of plants?

Evaluate Plants

Aspect Plant Design, Size, Repair, etc Product Variety & Packaging Gary Canada Frankfurt Mexico ‘68, similar to Whilst gary Cap. = 22M pounds Venezuela ‘64, no frills design Hat. = 5. 5M lbs 1905+ 1955+ 1960s Ability 18. 5M Cap. sama dengan 3. 7M lbs Limit. = 47M lbs lbs . Sunchem, Asia 1957 Cap = 5M lbs

20 product family members 8 formulations (of Releaseease) & 70 package sizes

5 merchandise families Just 50 kilogram packages

13 products six products a couple of formulations 60 kg deals bulk shipments; 50 kilogram packages

two products 60 kg bags

2 items many ½ kg, you kg, etc ., packages

Revenue Volume & Utilization (1982) Product Expense $/CWT Organic Mat'l A Yield & % Active Ingredient Others (Labor, etc . )

14M pounds or 75. 7 2 . 6M lbs or % 70. a few % 102. 93 80. 4 % & 84. 6 ninety-seven. 35 91. 1 % & 84. 7

38M lbs or 80. being unfaithful 17. 2M lbs or perhaps % 79. 2 % 76. 69 98. on the lookout for % & 84. 4 95. 01 94. six % & 85. 6

4. 1M lbs or 91. 1 % 116. 34 91. 7 & N/A

4M lbs or 80. 0 % 153. 80 98. 8 % & eighty five. 4

1000 nonunion nonunion 600 workers, workers, devoted workers, quality two different conscious processes, computer control

Low employee education, provides Far East + local mycket

Low member of staff education, old equipment

Officially excellent, include test labs, no union but even more workers.

What measurement should we make use of?

• What is a fair comparison? (economies of scale, distinct technologies) – – – – Cost per pound to make? (different costs) Total labor/volume? (labor costs, packaging issues) Capital/volume? (capacity issues) Expense before product packaging per pound?

Costs for different vegetation

Cost (1982 $ per cwt)

South america Canada Venezuela Frankfurt Gary Sunchem Total 95. 01 97. 35 116. thirty four 76. 69 102. 93 153. 8 Before The labels 92. 63 93. twenty-five 112. 31 73. thirty four 89. 15 149. twenty-four

Cost (1977 $ per cwt)

Mexico Canada Venezuela Frankfurt Whilst gary Sunchem Total 121. 88 66. thirty-one 67. sixteen 66. 81 64. 27 119. ninety five Before Product packaging 118. 82 63. 51 64. 83 63. fifth 89 55. 67 116. 39

Volume vs . Yield

one particular

Yield about Raw Mat'l A

Sunchem

Frankfurt

zero. 98 0. 96 0. 94 zero. 92 zero. 9 zero. 88 zero 10 twenty Production Quantity 30 45 Venezuela Canada Gary South america

Too Much Capacity?

Mexico Canada Venezuela Frankfurt Gary Sunchem Production Idle Capacity 17. 2 4. 8 installment payments on your 6 1 ) 1 5. 1 zero. 4 38 9 16 4. 5 4 1

Total Demand = 79. 9 Meters lbs; Total Capacity sama dengan 100. six M lbs

Should we close a plant? What type?

Might generally there be reasons for having surplus capacity or keeping all plants open? Safety complications (chemical), travel costs/time, hedge

One Approach: LP Unit

Purpose

Execute " what-if” analysis to find better network supply cycle structure

Goal

Minimize costs measured in certain common type (1982 U. S. $)

Decision Parameters

How much to make at each grow; how much to ship among regions

Restrictions

Capacity constraints, demand limitations, non-negativity (import restrictions, etc . )

Data

Costs, import tariffs, exchange rates, capacity/demand info

How you can Solve?

• Basic " what if” analysis

– Trial-and-error – Inefficient, not really guaranteed to acquire optimal solution

• Surpass Solver Still, is this necessarily the best (or even a good) solution? Issues change (exchange rates, pumpiing, etc . ) http://www.oanda.com/convert/classic http://www.sunshinecable.com/~eisehan/V80-10en.htm International Monetary Fund: Worldwide Financial Figures Yearbook.

Do they offer a better approach to solve?

Start off Simulate Location Exchange Rates & Demand Recalculate...

03.09.2019

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