Supply Chain Modelling

This report focuses on supply chain modelling and its importance in business operations. It discusses the case study of Dronautics Ltd. and their efforts to minimize transportation costs while maintaining supply. The report also provides insights into the optimal manufacturing site and distribution network for the company. The subject is supply chain management and the document type is a case study.

Running head: SUPPLY CHAIN MODELLLING
Supply Chain Modelling
Student Name
Institution Name
1

SUPPLY CHAIN MODELLING
Introduction
The management of the supply chain is assumed to be one of the most vital parts of all
business operations. From the business dictionary it is defined as the management of materials
and information flow in a supply chain to deliver the best degree of customer satisfaction at the
lowest possible cost. An efficient supply chain network can assist a firm to achieve a competitive
advantage which means enhance profitability compared to other industries in the market
(Business Dictionery, 2019). The general assumption in addition to past business experiences do
support the notion that through effective management of a supply chain a business can be able to
turns its story to a success. For instance, the Walmart story of success is greatly built around the
improvement of its supply chain which did enhance customer satisfaction and minimized the
operation costs. Through improvement of their supply chain network, the management of
Walmart were able to drive the company to a position of one of the world largest retailers (Lu,
2014).
The definition by Supply chain Management textbook state that supply chain is a network
comprised of facilities and transportation systems that allow the implementation of procurement
of materials, their assembling into finished commodities as well as the final distribution to the
consumers. Based on this definition supply chain, management can be stated to be the active
management of the listed activities so as to achieve the optimal customer satisfaction at a
minimal cost possible. With this a firm is able to achieve a competitive advantage and hence
increase its overall profitability (Hill, 2010). Supply chain is a complicated process that covers
several activities. These activities are genialized by a term driver of a supply chain. They are
location, inventory, production, information as well as transportation.
In this report the focus will be to model the best supply chain for Dronautics ltd. This is a
drone manufacturing company that operates three manufacturing sites across Australia. The sites
are located in Cairns (QLD), Darwin (NT) and Mandurah (WA). In addition, the firm possess
two distribution centers one in Newcastle and another in Adelaide. For the purpose of
operational efficiency, the current policy of the firm demands that all the products go through the
distribution center before they are later transferred to the markets. In recent times the demand for
the drones from the firm have gone up. Even though the firm’s production capacity has been able
to withstand this surging demand, the transportation cost has been very high hence, limiting the
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SUPPLY CHAIN MODELLING
company’s profitability. Due to this high cost of transportation, the management of Dronautics
are interested in revising the transport supply chain to minimize the costs of operation while at
the same time maintaining supply of goods to the respective markets. Furthermore, in the past
Dronautics used to transport the drones as individual units something which the managers are
reconsidering due to the introduction of transportation in pallets. The use of pallets excludes
additional handling and other manual operations hence cutting down on the costs.
Using the data collected by the company’s information office, will develop models to
generate the optimal transport network taking accounts of the various options available to the
management for cutting down the cost of operation.
1. Modelling the preferable manufacturing site
In this approach will apply the available data to model the most cost-efficient center to
manufacture the drones. When undertaking this modelling will account for the cost of
manufacturing the goods as well as the money spent transferring them to the distribution centers.
The current transport options available is either as individual unit or pallet packs. A pack of
pallet contains 240 drones. The model developed should therefore be able to decide which is the
best option to use in transporting the products.
Creation of the model
Inputs
Production cost
Plant Volume Cost per unit
Cairns 0 $43
Darwin 185870 $40
Mandurah 0 $42
Total Production cost $7,434,800
Transportation cost from operating points to the distribution centers
Per Pallet ($) Per Unit ($)
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SUPPLY CHAIN MODELLING
Adelaide Newcastle Adelaide Newcastle
Cairns $790 $660 $6 $5
Darwin $530 $920 $4 $7
Mandurah $790 $1,190 $6 $9
Decision variables
Volume transported from the centers to the distribution points
Per Pallet ($) Per Unit ($) Total
Adelaide Newcastle Adelaide Newcastle
Cairns 0 0 0 0 0
Darwin 774 0 110 0 185870
Mandurah 0 0 0 0 0
Total 774 0 110 0 185870
Total cost of transport to the distribution points $410,660
Constraint
Total supply
Total
deman
d
0
185870
0
185870 Equals 185870
Objective function
Total cost $7,845,46
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SUPPLY CHAIN MODELLING
0
Using the solver add in in Micros fit excel, we set the variables and the constraints to
obtain the output shown below.
Cell Name
Original
Value Final Value
$E$28
Total cost
Newcastle $7,845,460 $7,845,460
Cell Name
Original
Value Final Value
Intege
r
$B$22 Cairns Adelaide 0 0 Integer
$C$22 Cairns Newcastle 0 0 Integer
$D$22 Cairns Adelaide 0 0 Integer
$E$22 Cairns Newcastle 0 0 Integer
$B$23 Darwin Adelaide 774 774 Integer
$C$23
Darwin
Newcastle 0 0 Integer
$D$23 Darwin Adelaide 110 110 Integer
$E$23
Darwin
Newcastle 0 0 Integer
$B$24
Mandurah
Adelaide 0 0 Integer
$C$24
Mandurah
Newcastle 0 0 Integer
$D$24
Mandurah
Adelaide 0 0 Integer
$E$24 Mandurah 0 0 Integer
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SUPPLY CHAIN MODELLING
Newcastle
Cell Name Cell Value Formula Status
Slac
k
$G$25 Total 185870
$G$25=$H$
25
Bindin
g 0
$B$22:
$E$24=Integer
Discussion
Based on the outcome of the model, the optimal course of action is for Dronautics to major
the production of the drones at the Darwin center. The cost of production at this center is $ 40
per unit, which is the minimum production cost out of the three manufacturing points.
Developing the required number of drones at this center will demand the firm produces 185,870
drones at a cost of $ 7,434,800 which is the minimal cost of production that can be attained.
2. The distribution network and the associated flow over the entire network.
In the solution for question 1 above, we have attained the optimum manufacturing points as
the Darwin center. The next decision will be how many units to distribute to the various
distribution centers to reach all the 12 markets at a minimal transport cost. Also, the managers
need to decide how to pack the drones so as to cut down the cost of transport.
As generated by the model developed in question1 above, the table below summaries the
distribution to the centers.
Volume transported from the centers to the distribution points
Per Pallet ($) Per Unit ($)
Adelaide Newcastle Adelaide Newcastle
Cairns 0 0 0 0
Darwin 774 0 110 0
Mandurah 0 0 0 0
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SUPPLY CHAIN MODELLING
Total 774 0 110 0
Total cost of transport to the distribution points $410,660
Being that the optimal manufacturing point is Darwin, all the drones will be created at
this center and supplied to either the Adelaide or the Newcastle distribution center.
To cut down the costs the drones will be packed into 774 pallets with each pallet being
transported at a cist of $ 530 to the Adelaide distribution center. The total cost of transporting the
pallets will be $ 410,220. The pallets will contain a total of 185,760 drones. The remaining 110
units will be transported to Adelaide distribution point at a cost of $ 4 each. This will consume a
total of $440. Therefore, the total optimal cost of supplying the drones to the distribution centers
will be $ 410,660.
This is the minimal cost that can be incurred in the transportation of the drones from the
manufacturing points to the various distribution centers.
From the distribution centers, the administration needs to make a decision on the number
of drones to be supplied from the various distribution centers to the respective markets.
The model will be as follows
Inputs
Transportation cost from the distribution centers to the markets
Per Pallet
($)
Per Unit ($)
Adelaide Newcastle Adelaide Newcastle
Sydney $530 $130 $4 $1
Melbourne $460 $530 $4 $4
Brisbane $590 $330 $5 $3
Perth $860 $1,060 $7 $8
Adelaide $70 $590 $1 $5
Gold Coast Tweed $590 $330 $5 $3
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SUPPLY CHAIN MODELLING
Heads
Newcastle-Maitland $590 $70 $5 $1
Canberra-Queanbeyan $460 $200 $4 $2
Sunshine Coast $660 $400 $5 $3
Wollongong $530 $200 $4 $2
Geelong $460 $530 $4 $4
Hobart $1,320 $1,580 $10 $12
Decision variables
Quantity distributed from the center to the market
Per Pallet
($)
Per Unit ($)
Adelaide Newcastle Adelaide Newcastle
Sydney 209 0 10 0
Melbourne 206 0 10 0
Brisbane 103 0 7 0
Perth 86 0 9 0
Adelaide 56 0 9 0
Gold Coast Tweed
Heads
28 0 9 0
Newcastle-Maitland 20 0 9 0
Canberra-Queanbeyan 19 0 9 0
Sunshine Coast 14 0 8 0
Wollongong 13 0 9 0
Geelong 11 0 11 0
Hobart 10 0 10 0
Total 774 0 110 0
Objective function
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SUPPLY CHAIN MODELLING
Total cost of
distribution to the
market
$415,231
This generate the output given below
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SUPPLY CHAIN MODELLING
Objective Cell (Min)
Cell Name Original Value Final Value
$F$46 Total cost of distribution to the market Newcastle $415,231 $415,231
Variable Cells
Cell Name Original Value Final Value Integer
$C$33 Sydney Adelaide 209 209 Contin
$D$33 Sydney Newcastle 0 0 Contin
$E$33 Sydney Adelaide 10 10 Integer
$F$33 Sydney Newcastle 0 0 Contin
$C$34 Melbourne Adelaide 206 206 Contin
$D$34 Melbourne Newcastle 0 0 Contin
$E$34 Melbourne Adelaide 10 10 Integer
$F$34 Melbourne Newcastle 0 0 Contin
$C$35 Brisbane Adelaide 103 103 Contin
$D$35 Brisbane Newcastle 0 0 Contin
$E$35 Brisbane Adelaide 7 7 Integer
$F$35 Brisbane Newcastle 0 0 Contin
$C$36 Perth Adelaide 86 86 Contin
$D$36 Perth Newcastle 0 0 Contin
$E$36 Perth Adelaide 9 9 Integer
$F$36 Perth Newcastle 0 0 Contin
$C$37 Adelaide Adelaide 56 56 Contin
$D$37 Adelaide Newcastle 0 0 Contin
$E$37 Adelaide Adelaide 9 9 Integer
$F$37 Adelaide Newcastle 0 0 Contin
$C$38 Gold Coast Tweed Heads Adelaide 28 28 Contin
$D$38 Gold Coast Tweed Heads Newcastle 0 0 Contin
$E$38 Gold Coast Tweed Heads Adelaide 9 9 Integer
$F$38 Gold Coast Tweed Heads Newcastle 0 0 Contin
$C$39 Newcastle-Maitland Adelaide 20 20 Contin
$D$39 Newcastle-Maitland Newcastle 0 0 Contin
$E$39 Newcastle-Maitland Adelaide 9 9 Integer
$F$39 Newcastle-Maitland Newcastle 0 0 Contin
$C$40 Canberra-Quenbeyan Adelaide 19 19 Contin
$D$40 Canberra-Quenbeyan Newcastle 0 0 Contin
$E$40 Canberra-Quenbeyan Adelaide 9 9 Integer
$F$40 Canberra-Quenbeyan Newcastle 0 0 Contin
$C$41 Sunshine Coast Adelaide 14 14 Contin
$D$41 Sunshine Coast Newcastle 0 0 Contin
$E$41 Sunshine Coast Adelaide 8 8 Integer
$F$41 Sunshine Coast Newcastle 0 0 Contin
$C$42 Wollongong Adelaide 13 13 Contin
$D$42 Wollongong Newcastle 0 0 Contin
$E$42 Wollongong Adelaide 9 9 Integer
$F$42 Wollongong Newcastle 0 0 Contin
$C$43 Geelong Adelaide 11 11 Contin
$D$43 Geelong Newcastle 0 0 Contin
$E$43 Geelong Adelaide 11 11 Integer
$F$43 Geelong Newcastle 0 0 Contin
$C$44 Hobart Adelaide 10 10 Contin
$D$44 Hobart Newcastle 0 0 Contin
$E$44 Hobart Adelaide 10 10 Integer
$F$44 Hobart Newcastle 0 0 Contin
Constraints
Cell Name Cell Value Formula Status Slack
$C$45 Total Adelaide 774 $C$45=$C$8 Binding 0
$D$45 Total Newcastle 0 $D$45=$D$8 Binding 0
$E$45 Total Adelaide 110 $E$45=$E$8 Binding 0
$F$45 Total Newcastle 0 $F$45=$F$8 Binding 0
$G$33 Sydney Supply 50230 $G$33=$H$33 Binding 0
$G$34 Melbourne Supply 49360 $G$34=$H$34 Binding 0
$G$35 Brisbane Supply 24630 $G$35=$H$35 Binding 0
$G$36 Perth Supply 20590 $G$36=$H$36 Binding 0
$G$37 Adelaide Supply 13460 $G$37=$H$37 Binding 0
$G$38 Gold Coast Tweed Heads Supply 6790 $G$38=$H$38 Binding 0
$G$39 Newcastle-Maitland Supply 4870 $G$39=$H$39 Binding 0
$G$40 Canberra-Quenbeyan Supply 4580 $G$40=$H$40 Binding 0
$G$41 Sunshine Coast Supply 3330 $G$41=$H$41 Binding 0
$G$42 Wollongong Supply 3020 $G$42=$H$42 Binding 0
$G$43 Geelong Supply 2680.000001 $G$43=$H$43 Binding 0
$G$44 Hobart Supply 2329.999999 $G$44=$H$44 Binding 0
$E$33:$E$44=Integer
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SUPPLY CHAIN MODELLING
Discussion
As from the production model created in 1, the firm will distribute the products to the
market from the Adelaide distribution center.
The units and pallets to be supplied to each market is summarized in the table below
Adelaide
(Pallets)
Adelaide
units)
Sydney 209 10
Melbourne 206 10
Brisbane 103 7
Perth 86 9
Adelaide 56 9
Gold Coast Tweed
Heads
28 9
Newcastle-Maitland 20 9
Canberra-Quenbeyan 19 9
Sunshine Coast 14 8
Wollongong 13 9
Geelong 11 11
Hobart 10 10
Total 774 110
This will consume a total of $ 415,231 which is the minimal cost of transporting the products
from Adelaide to the market.
3. Distribution center policy
The policy that the products have to go through the distribution center is not rational if the
cost minimization principle is taken into account. By transporting the products directly from the
manufacturing points to the markets, the firm will be able to save on the extra costs such as
transport to the distribution centers, packaging and repackaging as well as having to maintain
two sets of warehouses one at the manufacturing point and another at the distribution center.
Suppose the managers are open to lifting this policy, all suggest products be transported directly
from the manufacturing points to the markets.
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SUPPLY CHAIN MODELLING
For this change to have an impact on the transport cost, the management of Dronautics will
need to conduct an analysis on the existing costs of direct transport from the manufacturing
points to the markets. This will allow obtaining of gainful data that can be useful on making the
decision of the optimal transport rout to take. Furthermore, by eliminating the distribution
centers am expecting the cost of running the business to drop as well as an improvement on
customer satisfaction through quicker delivery of products.
4. Impact of breaking down of the pallets
In a case where breaking of the pallets is allowed, there will be no need to transport any
drones as individual unit. This means all the products will be transported in pallets form and the
resultant cost will be generated by the model given below.
Inputs
Volume transported from the centers to the distribution points
Per Pallet ($) Total
Adelaid
e
Newcastle
Cairns 0 0 0
Darwin 774 0 185870
Mandurah 0 0 0
Total 774.458 0 185870
Total cost of transport to the distribution points $410,66
0
Transportation cost from the distribution centers to the markets
Per Pallet ($)
Adelaid
e
Newcastle
Sydney $530 $130
Melbourne $460 $530
Brisbane $590 $330
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SUPPLY CHAIN MODELLING
Perth $860 $1,060
Adelaide $70 $590
Gold Coast Tweed
Heads
$590 $330
Newcastle-Maitland $590 $70
Canberra-Queanbeyan $460 $200
Sunshine Coast $660 $400
Wollongong $530 $200
Geelong $460 $530
Hobart $1,320 $1,580
Decision variables
Quantity distributed from the center to the market
Per Pallet ($)
Adelaid
e
Newcas
tle
Supply Demand
Sydney 209 0 50230.0
5
50230
Melbourne 206 0 49360 49360
Brisbane 103 0 24630 24630
Perth 86 0 20590 20590
Adelaide 56 0 13460 13460
Gold Coast Tweed
Heads
28 0 6790 6790
Newcastle-Maitland 20 0 4870 4870
Canberra-Quenbeyan 19 0 4580 4580
Sunshine Coast 14 0 3330 3330
Wollongong 13 0 3020 3020
Geelong 11 0 2680 2680
Hobart 10 0 2330 2330
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SUPPLY CHAIN MODELLING
Total 774 0 185870 185870
Objective function
Total cost of
distribution to the
market
415007.
6
Discussion
In a situation where pallets can be broken down, the cost of transport from the distribution
centers to the various markets will go down from the initial value of $ 415,231 to $ 415,007. The
reduced cost will mean more profits from the firm.
5. Relocation of production to Newcastle
One of the ways of minimizing the cost of running the supply chain is relocating production
to regions that are nearer to the market. In this case two options are available that is relocate the
production of Dronautics to either Adelaide or Newcastle. The production cost at Newcastle is $
32 per unit while at Adelaide it is $ 33 per unit.
The two models displayed below summarizes the outcome of relocation to Adelaide or
Newcastle.
Relocating the production to Newcastle
Cost of transport from Newcastle manufacturing center to the
markets
Newcastle
(pallets) Newcastle (units)
Sydney $130 $1
Melbourne $530 $4
Brisbane $330 $3
Perth $1,060 $8
Adelaide $590 $5
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SUPPLY CHAIN MODELLING
Gold Coast Tweed
Heads $330 $3
Newcastle-Maitland $70 $1
Canberra-Queenbeyan $200 $2
Sunshine Coast $400 $3
Wollongong $200 $2
Geelong $530 $4
Hobart $1,580 $12
Units transported to the various market centres
pallets Units Total supply Total demand
Sydney 209 70 50230 50230
Melbourne 205 160 49360 49360
Brisbane 102 150 24630 24630
Perth 85 190 20590 20590
Adelaide 56 20 13460 13460
Gold Coast Tweed Heads 28 70 6790 6790
Newcstle-Maitland 20 70 4870 4870
Canberra-Queanbeyan 19 20 4580 4580
Sunshine Coast 13 210 3330 3330
Wollongong 11 380 3020 3020
Geelong 11 40 2680 2680
Hobart 10 0 2400 2330
Total 769 1380
Total market dictribution cost $340,385.00
Production cost Total
Newcastle 32 $5,950,080.00
Fixed annual cost 1500000
Total operation cost $7,790,465.00
Newcastle
Relocating the production to Adelaide
Cost of transport from Adelaide manufacturing center to the
markets
Adelaide
Pallets Units
Sydney $530 $4
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SUPPLY CHAIN MODELLING
Melbourne $460 $4
Brisbane $590 $5
Perth $860 $7
Adelaide $70 $1
Gold Coast Tweed Heads $590 $5
Newcastle-Maitland $590 $5
Canberra-Queanbeyan $460 $4
Sunshine Coast $660 $5
Wollongong $530 $4
Geelong $460 $4
Hobart $1,320 $10
Units transported to the various market centres
Adelaide
Pallets Units Total supply Total demand
Sydney 208 310 50230 50230
Melbourne 205 160 49360 49360
Brisbane 102 150 24630 24630
Perth 85 190 20590 20590
Adelaide 45 2660 13460 13460
Gold Coast Tweed Heads 28 70 6790 6790
Newcstle-Maitland 20 70 4870 4870
Canberra-Queanbeyan 19 22 4582 4580
Sunshine Coast 13 210 3330 3330
Wollongong 12 140 3020 3020
Geelong 11 40 2680 2680
Hobart 10 0 2400 2330
Total 758 4022
Total market dictribution cost $418,727.00
Production cost Total
Adelaide $33 $6,136,086.00
Fixed annual cost $1,500,000
Total operation cost $8,054,813.00
Based on the two models relocating to Newcastle will attract a total cost of operation of
$7,790,465. On the other hand, operating from Adelaide will attract an operational cost of
$8,054,813. Currently the total cost by Dronautics exceeds any of the two suggested options
hence it will be viable to relocate to either regions. This is contributed to by the lower production
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SUPPLY CHAIN MODELLING
cost as well as the reduced transport cost as the market is near. To optimize the profitability of
the firm it is recommended that the production is relocated to Newcastle.
The table summarizes the optimal supply line to various markets from the Newcastle production
base
Newcastle
pallets Units
Sydney 209 70
Melbourne 205 160
Brisbane 102 150
Perth 85 190
Adelaide 56 20
Gold Coast Tweed
Heads 28 70
Newcastle-Maitland 20 70
Canberra-Queanbeyan 19 20
Sunshine Coast 13 210
Wollongong 11 380
Geelong 11 40
Hobart 10 0
6. Impact of the production relocation
Transferring the operations of the Dronautics limited from the primary production site to
Newcastle will cut the cost of production from the current total of $ 7,434,800 to $ 5,950,080. In
addition, the transport cost will reduce from the initial $ 415,231 to $ 340,385. The production at
Newcastle will though be inflated by the annual fixed cost of $ 1.5 million. The overall effect
will be a cost reduction from the initial total cost of operation of $8,260,691 to $7,790,465. This
is a profit of $ 470,226. As a way of cutting down the operation cost it will be recommendable
that Dronautics transfer its production activities from Darwin to Newcastle.
7. Impacts of production relocation to cycle and safety stock
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SUPPLY CHAIN MODELLING
Safety stock is the inventory that is kept by the firm so as to sustain the demand should
production and transport be affected by uncertainties. In the current system drones have to be
transported from the production point to the distribution center and later to the markets. This
long transport line increases the uncertainties hence demands sustaining higher safety stocks.
When the firm relocates to Newcastle, the production point will be nearer to the markets. The
shorter transport line will reduce uncertainties hence demand retaining of less volume of safety
stock.
8. Another possible scenario
Instead of the company strategizing to relocate their production to either Adelaide or
Newcastle the firm can open one center in both of the regions. The model below gives the costs
associated with this option.
Transportation cost from the new manufacturing centers to the markets
Adelaide Newcastle Adelaide Newcastle
Sydney $530 $130 $4 $1
Melbourne $460 $530 $4 $4
Brisbane $590 $330 $5 $3
Perth $860 $1,060 $7 $8
Adelaide $70 $590 $1 $5
Gold Coast Tweed Heads $590 $330 $5 $3
Newcstle-Maitland $590 $70 $5 $1
Canberra-Queanbeyan $460 $200 $4 $2
Sunshine Coast $660 $400 $5 $3
Wollongong $530 $200 $4 $2
Geelong $460 $530 $4 $4
Hobart $1,320 $1,580 $10 $12
Per Pallet ($) Per Unit ($)
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SUPPLY CHAIN MODELLING
Transportation units from the new manufacturing centers to the markets
Adelaide Newcastle Adelaide Newcastle Adelaide Newcastle Total supply Total demand
Sydney 0 209 28 42 $924 $1,606,464 50230 50230
Melbourne 205 0 27 133 $1,624,491 $4,256 49360 49360
Brisbane 0 102 1 149 $33 $788,128 24630 24630
Perth 4 81 93 97 $34,749 $625,184 20590 20590
Adelaide 55 0 131 129 $439,923 $4,128 13460 13460
Gold Coast Tweed Heads 0 28 11 59 $363 $216,928 6790 6790
Newcstle-Maitland 0 20 0 70 $0 $155,840 4870 4870
Canberra-Queanbeyan 0 19 10 10 $330 $146,240 4580 4580
Sunshine Coast 0 13 1 209 $33 $106,528 3330 3330
Wollongong 0 12 1 139 $33 $96,608 3020 3020
Geelong 0 11 16 25 $528 $85,280 2681 2680
Hobart 10 0 0 0 $79,200 $0 2400 2330
Total 274 495 319 1062 $2,180,607 $3,835,584
Transport cost $114,790 $174,560 $1,031 $3,436
Fixed cost $1,500,000 $1,500,000
Total $1,615,821 $1,677,996
Total cost of operation $9,310,008
Production costPer Pallet ($) Per Unit ($)
From this model the various products transported to the markets from the manufacturing points
are as summarized in the table below.
Per Pallet ($) Per Unit ($)
Adelaide Newcastle Adelaide Newcastle
Sydney 0 209 28 42
Melbourne 205 0 27 133
Brisbane 0 102 1 149
Perth 4 81 93 97
Adelaide 55 0 131 129
Gold Coast Tweed
Heads 0 28 11 59
Newcastle-Maitland 0 20 0 70
Canberra-Queanbeyan 0 19 10 10
Sunshine Coast 0 13 1 209
Wollongong 0 12 1 139
Geelong 0 11 16 25
Hobart 10 0 0 0
Discussion
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SUPPLY CHAIN MODELLING
The current supply chain of the firm involves transporting the products from other
manufacturing points to Adelaide or Newcastle before farther taking the products to the various
markets. The total cost associated with running two new firms one at Adelaide and another at
Newcastle will be $ 9,310,008. This value is very high compared to the early suggested supply
chain that will cost only $8,260,691. The cost of transport and that of production will be reduced
when the firm relocates to Adelaide and Australia. However, the high fixed cost of operating the
two manufacturing firms made the supply chain more expensive. It is thus not economical to
open new production points at Adelaide and Newcastle. This option is not viable and hence
should not be put into place unless the management of Dronautics can get away to minimize the
fixed production cost.
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SUPPLY CHAIN MODELLING
References
Business Dictionery, 2019. supply chain management (SCM). [Online]
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SCM.html
[Accessed 15 May 2019].
Hill, C. &. J. G., 2010. Strategic Management Theory. An integrated approach. 9th ed. s.l.:s.n.
https://www.worldcat.org/title/strategic-management-an-integrated-approach-theory-cases/oclc/
920736153
Lu, C., 2014. Case studies, insights & analysis: Walmart’s successful supply chain management.
[Online]
Available at: https://www.tradegecko.com/blog/incredibly-successful-supply-chain-
management-walmart
[Accessed 15 May 2019].
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