49680 Value Chain Engineering Systems - BarCo Corporation - Engineering Report Writing Assessment Answer

Assessment Task:

49680 Value Chain Engineering Systems Report Writing Assessment Answer

Group Assignment 2: Engineering the supply chain of BarCo Corporation

Objectives addressed by this Assignment;

• Understand the business problem from the perspective of supply chain and operations management lens such as - Supply, Demand, Sustainability and Decision Making.
•  Determine Strategic Options/recommendations and quantify the benefits (tangible and intangible) and the risks to achieve the expected outcomes.
•  Apply research skills and appropriate methodologies to solve optimisation problems

Problem Context: The General Manager of the Texas Division of BarCo Corporation, received notification from MaxEnergy that natural gas supplies were being rapidly depleted. In the event of a shortage, MaxEnergy, the main producer and distributor of natural gas in the Gulf South region, would allocate gas to its customers under the following provisions established by the Federal Commission:

 First Priority: Residential and commercial heating and cooling

Second Priority: Commercial and industrial firms that use natural gas as a source of raw material

Third Priority: Industrial firms that use natural gas as a boiler fuel

In communication, it was mentioned that most of BarCo's uses were in the second and third priority classifications. Hence, BarCo would probably be subjected to "rolling brownouts", temporary and periodic curtailments of natural gas supplies. MaxEnergy planned to monitor its pipeline pressures and order reductions to maintain minimum levels. MaxEnergy preferred that its customers initiate the reduction process to minimize the effect on their industrial processes. MaxEnergy was authorized, however, to curtail supplies unilaterally if pipeline pressure fell below minimum levels.

The natural gas shortage was created by the unprecedented heatwave of the summer of 2010. Electrical generating plants were operating at capacity to supply electricity to operate the air conditioning and refrigeration units. Although long-range plans called for these utility companies to convert to coal, oil, or nuclear fuel, natural gas remained the dominant boiler fuel.

Tasks:

1. Define the business problem and come up with a technique which can be helpful in analyzing this situation

2. Formulate and resolve situations for 20 and 40% curtailment of natural gas usage

3. Formulate and resolve distribution plan from MaxEnergy to BarCo

4. Based on your analysis, provide a discussion on BarCo’s options and your recommendations for

(i) the production and

(ii) distribution plan; during the curtailment scenario

5. Conduct the sensitivity analysis and describe the outcomes (for both production and distribution plans) in simple terms for the top management

6. Profit margins for products from BarCo has a lot of fluctuations. Provide your recommendations for the management in terms of the impact of such changes on the production plans

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