Buy Existing Paper - Supply Chain for Houses

Description

Supply Chain for Houses

The supply chain entails three main components for building, that is, block, ready mix (cement) and steel. The ready mix is supplied by either AlHaidan Company (HDC) or AlKefah Company (AKC). Nonetheless, the raw material for the ready mix for both AlHaidan Company and AlKefah Company is purchased from Hail Cement Company (HCC) that obtains its raw material from AlSaleh Crusher Plant (SCP).

 

 

 

 

 

 

 

 

 

 

 

 

Procurement Strategy for HDC

Safety Barriers have a high level of supply risk and low value to the firm since work will not be affected is they are not available. On the other hand, Ready mix grade 250 has a low level of supply risk and high value to the firm since work will stop if it is not available. The suitable procurement strategy for a product with a high level of supply risk and low value to the firm entails purchases, bottleneck and multiple suppliers. The ideal procurement strategy for a product with a low level of supply risk and high value to the firm entails concentrate, leverage purchases and concentrate. Based on this understanding, HDC should adopt an outsourcing strategy for making purchases and leveraging these purchases, but include multiple suppliers.Supply Chain for Houses

Manufacturing Strategy for AKC and HDC

The time taken between production and use for AKC’s and HDC’s Ready-mix grade 350 is 5 hours. However, AKC’s and HDC’s block has no time limit between its production and use. Both Ready-mix grade 350 and Block produced by ACK and HDC have no fixed specification. ACK and HDC can adopt a Make tot Stock (MTS) manufacturing strategy when it comes to their production of block since it has no time limit between its production and use. Thus, it can be utilized at any time by the consumer. This strategy also entails large volumes, low variety, economies of scale, long production runs, and distribution channels. When it comes to Ready-mix grade 350, ACK and HDC can adopt a Make to Order (MTO) manufacturing strategy since the production has to be used five hours after its production. This means that if the companies produce the product, but is not purchased or utilized within this time limit, it is tantamount to waste and loss. The Make to Order (MTO) manufacturing strategy involves relying on relatively small quantities with more intricacy.

ROP for Ready Mix grade 250

Reorder point in units (ROP) = Average daily demand in units * Average performance cycle length in days * Safety stock

In this case:

Reorder point in units (ROP) = Average daily demand in units * Average performance cycle length in days * Safety stock

Assuming that there is demand on each day of the week:

Daily Demand = Weekly demand / Seven days

= 1200 / 7

= 171.43

ROP = Average daily demand in units * Average performance cycle length in days * Safety stock

ROP = 171.43 * 5 * 200

= 171,430

 

Mitigation of Block’s high risk delay by HDC

Block has a high delay probability or risk of 15%. The product is of high value to the firm since work will stop when it is not available. HDC can mitigate Block’s delay probability or high risk by adding safety stock to base inventory. A safety stock provides the required raw materials necessary to keep the work going when there is a delay in the supply of raw materials and in the production process.

HDC can also have multiple suppliers to ensure that it does not lack the required raw materials to produce Block. Multiple suppliers of raw materials is equivalent to having an insurance policy that ensures the company can always access raw materials from should its current supply delay in supplying the order commodities.

Another mitigation strategy that HDC can utilize is a planning approach that entails proactively allocating inventory on the basis of product availability and forecasted demand, as well as, reviewing the inventory levels to determine how much and when to order.Supply Chain for Houses

EOQ that will order Block

Economic order quantity (EOQ) refers to the quantity that balances the cost of ordering with the cost of maintaining average inventory.

2 * Acquisition Cost Per Order * Weekly Demand

2 * 1.7 * 65,000

= 221,000

Order Cost * Inventory Carrying Rate

100 * 0.1

= 10

221,000 / 10

= 22,100

Square root of 22,100

= 148.66

The Economic order quantity (EOQ) is 148.66