Supply Chain Management .

This article discusses supply chain management and its various aspects such as cost comparison, environmental risks, ideal supplier, and more. It also includes a table and computations for better understanding. The author provides expert guidance on the topic.

Running head: SUPPLY CHAIN MANAGEMENT
Supply Chain Management
Name of the Student
Name of the University
Author’s Note

1SUPPLY CHAIN MANAGEMENT
Table of Contents
Answer to Question 1..........................................................................................................2
Answer to Question 2..........................................................................................................3
Answer to Question 3..........................................................................................................4
Answer to Question 4..........................................................................................................4
Answer to Question 5..........................................................................................................4
Answer to Question 6..........................................................................................................5
References............................................................................................................................8

2SUPPLY CHAIN MANAGEMENT
Answer to Question 1
The evaluation of unit price clearly suggests that the cost of sourcing the engines
from US is highest with $126.23 per consignment, whereas sourcing of the same from China will
cost $ 58.86.
5
0
20
40
60
80
100
120
140
58.86
80.78
105.4
126.23
Total Price for units Each Container
China Ukraine Netherlands U.S.
Table: Comparison of Total Price for units Each Container with US Supplier
(Source: As created by the author)
The cost comparison based on packaging, tooling, inland transportation and unit price
suggests that China is the cheapest of all other countries.

3SUPPLY CHAIN MANAGEMENT
China Ukraine Netherlands U.S.
0
500
1000
1500
2000
2500
3000
2000
2500
1750
1000
Packaging
China Ukraine Netherlands U.S.
0
20
40
60
80
100
120
140
100
75
125
30
Tooling
China Ukraine Netherlands U.S.
0
100
200
300
400
500
600
700
800
200
750
200
5.2
Inland Transportation
Inland Transportation China Ukraine Netherlands U.S.
0
20000
40000
60000
80000
100000
120000
140000
42000
60000
85000
120000
Unit Price
Table: Comparison of supplier options and their cost with US supplier
(Source: As created by the author)

4SUPPLY CHAIN MANAGEMENT
Answer to Question 2
Considering only the cost for manufacturing and procurement of the machine is not
enough for Beth. Some of the other cost comparison needs to include repair and maintenance for
procuring the equipment from China instead of Ukraine, Netherlands and U.S. Additionally, in
case the manufactured units need to be sold within U.S. then Beth needs to consider use amount
of inland transportation cost of $ 200 from China and Netherlands and $ 750 from Ukraine.
Answer to Question 3
The environmental risk of doing business with China will include some of the serious
challenges such as scarcity of water, increasing soil erosion, pollution and energy needs.
Similarly, in case Beth decides to supply from Ukraine she needs to consider corruption in
judicial system, lack of transparency in tax administration and overly bureaucratic processes. The
environmental risk in Netherlands will include spatial planning in local districts, sudden changes
in climate, noise reasons, complex procedure for permits and licenses. Some of the main
environmental weaknesses which may affect the supply may be seen with differentiating values
within the countries and complexity of formulating international policies. The total cost will
experience a surge with incremental environmental challenges (Sadgrove and Kit).
Answer to Question 4
In the given case the ideal supplier will be China as it is not only having the best price for
each container but also packaging, tooling, inland transportation and unit price.

5SUPPLY CHAIN MANAGEMENT
Answer to Question 5
The total cost can be reduced by having a better understanding of energy needs for
producing the machine. This will involve optimising the energy utilisation during all stages of
production.
Answer to Question 6
Based on the computation of NPV for the individual projects it can be clearly seen that
even if the price of China and Ukraine increases, they are the most suitable supplier in compared
to Western Europe and United States. This is evident with a total NPV of 131373.4 in China
along with an IRR of 98%. Similarly, the total NPV of the supplier in three years for Ukraine
will amount to 113373.4 with an IRR of 65%. Whereas on the other hand, all the other factors
such as NPV, IRR, payback period and profitability index is lower in both Western Europe and
United States. Therefore, as the NPV of China is highest over a period of three years the
increasing prices won’t be a major factor for choosing any other supplier (Leyman, Pieter, and
Mario Vanhoucke).

6SUPPLY CHAIN MANAGEMENT
Discount Rate 10%
Now 1 2 3
Cost of Machine -42000 58860 67690 74460
Annual Profit/Loss 36,000 72,000 1,08,000
Total Cash Flows -42000 36,000 72,000 108000
Discounting Factor 0 0.90909 0.82645 0.75131
Present Value of Cashflows -42000 32727.3 59504.1 81142
Net Present Value
IRR 98%
Payback Period Cost of investment/annual net cash flow
Payback Period 2.88
Profitability Index PV of future cash flows/Initial Investment
Profitability Index 4.13
China
Year
131373.4
Discount Rate 10%
Now 1 2 3
Cost of Machine -60000 80770 90470 97710
Annual Profit/Loss 36,000 72,000 1,08,000
Total Cash Flows -60000 36,000 72,000 108000
Discounting Factor 0 0.90909 0.82645 0.75131
Present Value of Cashflows -60000 32727.3 59504.1 81142
Net Present Value
IRR 65%
Payback Period Cost of investment/annual net cash flow
Payback Period 2.88
Profitability Index PV of future cash flows/Initial Investment
Profitability Index 2.89
Eastern Europe
Year
113373.4

7SUPPLY CHAIN MANAGEMENT
Discount Rate 10%
Now 1 2 3
Cost of Machine -85000 105400 103200 101230
Annual Profit/Loss 36,000 72,000 1,08,000
Total Cash Flows -85000 36,000 72,000 108000
Discounting Factor 0 0.90909 0.82645 0.75131
Present Value of Cashflows -85000 32727.3 59504.1 81142
Net Present Value
IRR 39%
Payback Period Cost of investment/annual net cash flow
Payback Period 2.88
Profitability Index PV of future cash flows/Initial Investment
Profitability Index 2.04
Western Europe
Year
88373.4
Discount Rate 10%
Now 1 2 3
Cost of Machine -120000 126230 119920 117520
Annual Profit/Loss 36,000 72,000 1,08,000
Total Cash Flows -120000 36,000 72,000 108000
Discounting Factor 0 0.90909 0.82645 0.75131
Present Value of Cashflows -120000 32727.3 59504.1 81142
Net Present Value
IRR 18%
Payback Period Cost of investment/annual net cash flow
Payback Period 2.88
Profitability Index PV of future cash flows/Initial Investment
Profitability Index 1.44
United States
Year
53373.4

8SUPPLY CHAIN MANAGEMENT
References
Leyman, Pieter, and Mario Vanhoucke. "Capital constraints and net present value optimization in
project scheduling." 15th International Conference on Project Management and Scheduling.
2016.
Sadgrove, Kit. The complete guide to business risk management. Routledge, 2016.