Supply Chain Decisions

1. Explain why supply chain management is important to a company. Explains the importance
of supply chain management to a company and how this supports the company's business
strategy.

2. Describe operations management (including supply chain management) tools used to support
best practices. Discusses how alliances or partnerships with other companies support
operations management strategy, and clarifies the importance of having them aligned with
the company’s operations management strategy.

3. Discuss alliances or partnerships a company might have with other companies to support its
operations management strategy. Discusses how alliances or partnerships with other
companies support operations management strategy, and clarifies the importance of having
them aligned with the company’s operations management strategy.

4. Describe how a company receives components and/or materials for its product or service.
Describes supply chain management tools and explains how they are used to support best
practices in operations management.

5. Explain how the component parts are integrated into the production process. Describes how
a company receives components and materials for its product or service and why those
processes were chosen.

6. Describe the key tradeoffs associated with JIT manufacturing. Describes the key tradeoffs
associated with JIT manufacturing and clarifies how these can impact a company’s success.

7. Explains how a company's component parts are integrated into the production process, and
clarifies how this supports a company’s operations management strategy.

8. Describe the key tradeoffs in making outsourcing decisions. Describes the key tradeoffs in
making outsourcing decisions, and correctly calculates the relevant costs to support a
decision.

Scenario Component: For the final component of this analysis, consider the following specific
potential outsourcing situation:

ABC has determined it can manufacture the new valve product internally for $27,000 in fixed
costs (FC) and $8 variable costs (VC) per unit. The company president has estimated ABC will
sell 4,800 (unit volume = UV) of these valves each year. Jay Production, a small but highly
reputable company specializing in outsourced mechanical manufacturing, has contacted ABC's
president, and offered to manufacture this new valve for ABC for an annual fee of $29,000 plus
$6 per unit.
9. Provide the algebraic equation for determining the total annual manufacturing cost (TC) of
the valve (using TC, FC, VC, and UV as variables).

10. Calculate and provide the total annual manufacturing cost if the valve is manufactured by
ABC.

11. Calculate and provide the total annual manufacturing cost if the valve is manufactured by
Jay.

12. Indicate which is better from a total annual manufacturing cost standpoint.