7108IBA: Supply Chain Modeling - Dronautics Ltd - Management Assessment Answer

Subject Code: 7108IBA Internal Code: 1AHDJG

Management Assessment Answer

TASK: Background Dronautics Ltd., a drone manufacturer operating across three manufacturing sites across Australia, has experienced a big surge in demand for their products over the past few years. Table 1 shows the current year’s demand information for 12 markets across Australia. Dronautics is currently manufacturing in Cairns (QLD), Darwin (NT), and Mandurah (WA). There are two distribution centers in its supply network, one in Adelaide (SA), and one in Newcastle (NSW). The company demands all products to go through the distribution centers for operational consistency. Production Relocation At the same time, Dronautics is also considering relocating its production facilities, as all three plants are not close to major markets. It was proposed that one new manufacturing facility to be opened and co-locate with one of the distribution centers. By doing so, Dronautics will be able to leverage the manufacturing economy of scales and be more responsive to market demand. If a drone is to be produced at the new facility, the unit production cost will be $33 in Adelaide, and $32 in Newcastle, as a result of a consolidation of manufacturing activities. The new manufacturing facility will cost $1.5 million annually to operate over its designed lifespan. With the co-location, products will be directly shipped out of the manufacturing facility. Dronautics will continue to use the pallets when possible. The existing manufacturing facilities will be used to manufacture other products. Tasks You will be using network optimization techniques, and based on the models you constructed, to answer the questions like the following ones (but you are not limited to those): 1. The manufacturing plans at Cairns, Darwin, and Mandurah, the three manufacturing sites. 2. The distribution network and the associated flows over the whole network. 3. How rational is the policy that products have to go through the distribution centers? If this could be changed, what changes you would like to propose? What results you would expect to see? 4. How much will be the cost difference, if breaking down of pallets (i.e., taking products from fully packed pallets) is allowed? 5. Assess whether it will be worthwhile if Dronautics relocates its production to either Adelaide or Newcastle. 6. If the production relocation is profitable, which site should be chosen? How much would be the cost saving? If the production location is not profitable, by how much should the annual operating cost reduce so that it will be attractive to Dronautics again? 7. Discuss the impact of production relocation to cycle and safety stocks, try to pick appropriate parameters to estimate the effect. 8. Construct at least one other possible scenario, and discuss your findings.

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