UNIVERSITI UTARA MALAYSIA

MASTER OF BUSINESS ADMINISTRATION

(MBA)

Case Study: Designing the Production Network at Coolwipes

Submitted By:
Tharshini Manalan
(COHORT 9 - ID 814789)

For
SUPPLY CHAIN MANAGEMENT (BJMP 6023)
DR. MARTINO LUIS

BJMP6023
Supply Chain Management


Case study: Designing the Production Network at Coolwipes
Question 1
What is the annual cost of serving the entire nation from Chicago?
Based on the calculation below, the total cost to serve Chicago is $32,661.40.
Plant Costs and Capacity


Wipes Ointment

Plant Fixed Cost
Variable
Cost/unit Capacity Fixed Cost
Variable
Cost/unit Capacity

Chicago 5000 10 5000 1500 20 1000

Princeton, NJ 2200 10 2000 1500 20 1000

Atlanta 2200 10 2000 1500 20 1000

LA 2200 10 2000 1500 20 1000


Regional Demand by Product

Zone Northwest southwest
Upper
midwest
lower
midwest northeast southeast Total

Wipes 500 700 900 800 1000 600 4500

Ointment 50 90 120 65 120 70 515


Transportation Costs

Northwest southwest
Upper
midwest
lower
midwest northeast southeast

Transport
cost
Multiplier
Chicago

1
BJMP6023
Supply Chain Management

6.32 6.32 3.68 4.04 5.76 5.96
Princeton, NJ

6.60

6.60

5.76

5.92

3.68

4.08

Atlanta

6.72

6.48

5.92

4.08

4.04

3.64

LA

4.36

3.68

6.32

6.32

6.72

6.60


Wipes Variables
Northwest southwest
Upper
midwest
lower
midwest northeast southeast Fixed Capacity
Chicago 500 700 900 800 1000 600 1 500
Princeton, NJ 0 0 0 0 0 0 0 0
Atlanta 0 0 0 0 0 0 0 0
LA 0 0 0 0 0 0 0 0
Demand 0 0 0 0 0 0


Ointment Variables
Northwest southwest
Upper
midwest
lower
midwest northeast southeast Fixed Capacity
Chicago 50 90 120 65 120 70 1 485
Princeton, NJ 0 0 0 0 0 0 0 0
Atlanta 0 0 0 0 0 0 0 0
LA 0 0 0 0 0 0 0 0
Demand 0 0 0 0 0 0


Total
Cost
32661.4

BJMP6023
Supply Chain Management


Question 2
Do you recommend adding any plant(s)? Is so, where should the plant(s) be built and what lines should be included? Assume that the Chicago
plant will be maintained at its current capacity but could be run at lower utilization. Would your decision be different if transportation costs
are half of their current value? What if they were double their current value?
There was reduction of total cost to $29,188.80. Based on this reduction would like to recommend on building a plant at Princeton, Atlanta and
LA. All of this plant can offer both the Wipes and Ointment product line. The calculation is shown below :

Plant Costs and Capacity


Wipes Ointment

Plant Fixed Cost
Variable
Cost/unit Capacity Fixed Cost
Variable
Cost/unit Capacity

Chicago 5000 10 5000 1500 20 1000

Princeton, NJ 2200 10 2000 1500 20 1000

Atlanta 2200 10 2000 1500 20 1000

LA 2200 10 2000 1500 20 1000


Regional Demand by Product

Zone Northwest southwest
Upper
midwest
lower
midwest northeast southeast Total

Wipes 500 700 900 800 1000 600 4500

Ointment 50 90 120 65 120 70 515




BJMP6023
Supply Chain Management



Transportation Costs
Northwest southwest
Upper
midwest
lower
midwest northeast southeast

Transport
cost
Multiplier
Chicago

6.32

6.32

3.68

4.04

5.76

5.96

1
Princeton, NJ

6.60

6.60

5.76

5.92

3.68

4.08

Atlanta

6.72

6.48

5.92

4.08

4.04

3.64

LA

4.36

3.68

6.32

6.32

6.72

6.60


Wipes Variables
Northwest southwest
Upper
midwest
lower
midwest northeast southeast Fixed Capacity
Chicago 0 0 900 800 0 0 1 3300
Princeton, NJ 0 0 0 0 1000 0 0.5 0
Atlanta 0 0 0 0 0 600 0.3 0
LA 500 700 0 0 0 0 0.6 0
Demand 0 0 0 0 0 0


Northwest southwest
Upper
midwest
lower
midwest northeast southeast Fixed Capacity
Chicago 0 0 120 65 0 0 1 815
Princeton, NJ 0 0 0 0 120 0 0.12 0
BJMP6023
Supply Chain Management

Atlanta 0 0 0 0 0 70 0.07 0
LA 50 90 0 0 0 0 0.14 0
Demand 0 0 0 0 0 0


Total
Cost
29188.8

The recommendation would remain the same to build all the additional plants, but with different production quantities if the transportation
costs were half their current amount as the resulting total cost would now be $16,947. 88 as calculated below:

Plant Costs and Capacity


Wipes Ointment

Plant Fixed Cost
Variable
Cost/unit Capacity Fixed Cost
Variable
Cost/unit Capacity

Chicago 5000 10 5000 1500 20 1000

Princeton, NJ 2200 10 2000 1500 20 1000

Atlanta 2200 10 2000 1500 20 1000

LA 2200 10 2000 1500 20 1000



Regional Demand by Product

Zone Northwest southwest
Upper
midwest
lower
midwest northeast southeast Total

Wipes 500 700 900 800 1000 600 4500

Ointment 50 90 120 65 120 70 515

BJMP6023
Supply Chain Management


Transportation Costs

Northwest southwest
Upper
midwest
lower
midwest northeast southeast

Transport
cost
Multiplier
Chicago

3.16

3.16

1.84

2.02

2.88

2.98

0.5
Princeton, NJ

3.30

3.30

2.88

2.96

1.84

2.04

Atlanta

3.36

3.24

2.96

2.04

2.02

1.82

LA

2.18

1.84

3.16

3.16

3.36

3.30


Wipes Variables
Northwest southwest
Upper
midwest
lower
midwest northeast southeast Fixed Capacity
Chicago 148.3937 196.58816 264.565 234.148546 270.3321 168.9190782 1 3717.053
Princeton, NJ 115.8152 165.81522 212.283 187.675122 245.4469 145.0543489 0.53604 0
Atlanta 115.8797 166.05073 211.969 191.286233 244.7403 145.9178755 0.53777 0
LA 120.2114 171.54589 211.184 186.890098 239.4807 140.1086974 0.53471 0
Demand 0 0 0 0 0 0



Ointment Variables
Northwest southwest
Upper
midwest
lower
midwest northeast southeast Fixed Capacity
Chicago 45.25362 53.508448 78.9855 59.8188387 59.75241 45.83936501 1 656.8418
BJMP6023
Supply Chain Management

Princeton, NJ 0.175122 10.175123 14.1425 0.78502517 22.30676 9.414253628 0.057 0
Atlanta 0 10.41063 13.8285 4.39613612 21.60024 10.27777926 0.06051 0
LA 4.571256 15.905799 13.0435 0 16.340058 4.468602102 0.05433 0
Demand 0 0 0 0 0 0


Total
Cost
16947.88

If transportation costs were double their current levels, the recommendation would be to stay with the Chicago facility servicing the entire
nation as the total costs would rise to $86,530.20.
Plant Costs and Capacity


Wipes Ointment

Plant Fixed Cost
Variable
Cost/unit Capacity
Fixed
Cost
Variable
Cost/unit Capacity

Chicago 5000 10 5000 1500 20 1000
Princeton,
NJ 2200 10 2000 1500 20 1000

Atlanta 2200 10 2000 1500 20 1000

LA 2200 10 2000 1500 20 1000



Regional Demand by Product

Zone Northwest southwest
Upper
midwest
lower
midwest northeast southeast Total

Wipes 500 700 900 800 1000 600 4500

BJMP6023
Supply Chain Management

Ointment 50 90 120 65 120 70 515


Transportation Costs


North
west
South
west
Upper
mid
west
lower
mid
west
North
east
South
east

Transport
cost
Multiplier
Chicago 12.64 12.64

7.36

8.08

11.52 11.92

2
Princeton,
NJ 13.20 13.20

11.52

11.84 7.36 8.16

Atlanta 13.44 12.96

11.84

8.16 8.08 7.28

LA 8.72 7.36

12.64

12.64

13.44 13.20





Wipes Variables

North
west
South
west
Upper
mid
west
lower
mid
west
North
east
South
east Fixed Capacity
Chicago 0 0 900 800 0 0 1 3300
Princeton,
NJ 0 0 0 0 1000 0 0.5 0
Atlanta 0 0 0 0 0 600 0.3 0
LA 500 700 0 0 0 0 0.6 0
BJMP6023
Supply Chain Management

Demand 0 0 0 0 0 0


Ointment Variables

North
west
South
west
Upper
mid
west
lower
mid
west
North
east
South
east Fixed Capacity
Chicago 0 0 120 65 0 0 1 815
Princeton,
NJ 0 0 0 0 120 0 0.12 0
Atlanta 0 0 0 0 0 70 0.07 0
LA 50 90 0 0 0 0 0.14 0
Demand 0 0 0 0 0 0


Total
Cost
86530.2









BJMP6023
Supply Chain Management


Question 3
As calculated below in the three spreadsheets, the recommendations would be exactly as above for current costs, transportation costs at half
their current level and with transportation costs at double their current costs. The only difference in the recommendations would involve the
production quantities at each facility.

Plant Costs and Capacity


Wipes Ointment

Plant Fixed Cost
Variable
Cost/unit Capacity Fixed Cost
Variable
Cost/unit Capacity

Chicago 5000 10 5000 1500 20 1000

Princeton, NJ 2200 10 2000 1500 20 1000

Atlanta 2200 10 2000 1500 20 1000

LA 2200 10 2000 1500 20 1000


Regional Demand by Product

Zone Northwest southwest
Upper
midwest lower midwest northeast southeast Total

Wipes 500 700 900 800 1000 600 4500

Ointment 50 90 120 65 120 70 515


Transportation Costs

Northwest southwest
Upper
midwest lower midwest northeast southeast

Transport
cost
Multiplier
BJMP6023
Supply Chain Management

Chicago 6.32

6.32 3.68 4.04 5.76 5.96

1
Princeton, NJ 6.60

6.60 5.76 5.92 3.68 4.08

Atlanta 6.72

6.48 5.92 4.08 4.04 3.64

LA 4.36

3.68 6.32 6.32 6.72 6.60


Wipes Variables
Northwest southwest
Upper
midwest lower midwest northeast southeast Fixed Capacity
Chicago 110.8526 147.57128 329.807 264.962732 213.3321 102.9381071 0.23389 0
Princeton, NJ 119.5143 169.51426 193.529 171.416398 278.5836 175.6963702 0.55413 0
Atlanta 117.7819 171.2466 191.219 197.978638 273.3866 182.0482804 0.56683 0
LA 151.8513 211.66785 185.445 165.641932 234.6977 139.3172423 0.54431 0
Demand 0 0 0 0 0 0


Ointment Variables
Northwest southwest
Upper
midwest lower midwest northeast southeast Fixed Capacity
Chicago 0 0 120 49.3274491 0 0 0.16933 0
Princeton, NJ 0 6.8413447 0 0 65.13929 36.90651706 0.10889 0
Atlanta 7.894912 21.368701 0 15.6725509 46.77481 33.09348294 0.1248 0
LA 42.10509 61.789955 0 0 8.0859 0 0.11198 0
Demand 0 0 0 0 0 0


Total
Cost 31015.503

BJMP6023
Supply Chain Management


Plant Costs and Capacity


Wipes Ointment

Plant Fixed Cost
Variable
Cost/unit Capacity Fixed Cost
Variable
Cost/unit Capacity

Chicago 5000 10 5000 1500 20 1000

Princeton, NJ 2200 10 2000 1500 20 1000

Atlanta 2200 10 2000 1500 20 1000

LA 2200 10 2000 1500 20 1000


Regional Demand by Product

Zone Northwest southwest
Upper
midwest
lower
midwest northeast southeast Total

Wipes 500 700 900 800 1000 600 4500

Ointment 50 90 120 65 120 70 515


Transportation Costs

Northwest southwest
Upper
midwest
lower
midwest northeast southeast

Transport
cost
Multiplier
Chicago 3.16

3.16

1.84 2.02 2.88 2.98

0.5
Princeton, NJ 3.30

3.30

2.88 2.96 1.84 2.04

Atlanta 3.36

3.24

2.96 2.04 2.02 1.82

LA 2.18

1.84

3.16 3.16 3.36 3.30


BJMP6023
Supply Chain Management



Wipes Variables
Northwest southwest
Upper
midwest
lower
midwest northeast southeast Fixed Capacity
Chicago 123.8451 160.56383 342.799 277.955261 226.3247 115.9306609 0.24948 0
Princeton, NJ 115.1834 165.18324 189.198 167.085556 274.2527 171.3655169 0.54113 0
Atlanta 113.4511 166.91575 186.889 193.6488091 269.0557 177.7174251 0.55384 0
LA 147.5204 207.337 181.114 161.311092 230.3668 134.986397 0.53132 0
Demand 0 0 0 0 0 0


Ointment Variables
Northwest southwest
Upper
midwest
lower
midwest northeast southeast Fixed Capacity
Chicago 0 0 120 49.3274491 0 0 0.16933 0
Princeton, NJ 0 6.8413447 0 0 65.13929 36.90651706 0.10889 0
Atlanta 7.894912 21.368701 0 15.6725509 46.77481 33.09348294 0.1248 0
LA 42.10509 61.789955 0 0 8.0859 0 0.11198 0
Demand 0 0 0 0 0 0


Total
Cost
11948.843


Plant Costs and Capacity


Wipes Ointment

Plant Fixed Cost
Variable
Cost/unit Capacity
Fixed
Cost
Variable
Cost/unit Capacity

BJMP6023
Supply Chain Management

Chicago 5000 10 5000 1500 20 1000
Princeton,
NJ 2200 10 2000 1500 20 1000

Atlanta 2200 10 2000 1500 20 1000

LA 2200 10 2000 1500 20 1000


Regional Demand by Product

Zone Northwest southwest
Upper
midwest
lower
midwest northeast southeast Total

Wipes 500 700 900 800 1000 600 4500

Ointment 50 90 120 65 120 70 515


Transportation Costs

Northwest southwest
Upper
midwest
lower
midwest northeast southeast

Transport
cost
Multiplier
Chicago 12.64 12.64

7.36

8.08

11.52 11.92

2
Princeton,
NJ 13.20 13.20

11.52

11.84 7.36 8.16

Atlanta 13.44 12.96

11.84

8.16 8.08 7.28

LA 8.72 7.36

12.64

12.64

13.44 13.20


Wipes Variables
Northwest southwest
Upper
midwest
lower
midwest northeast southeast Fixed Capacity
BJMP6023
Supply Chain Management

Chicago 0 0 900 800 0 0 0.34 0
Princeton,
NJ 0 0 0 0 1000 0 0.5 0
Atlanta 0 0 0 0 0 600 0.3 0
LA 500 700 0 0 0 0 0.6 0
Demand 0 0 0 0 0 0


Ointment Variables
Northwest southwest
Upper
midwest
lower
midwest northeast southeast Fixed Capacity
Chicago 0 0 120 65 0 0 0.185 0
Princeton,
NJ 0 0 0 0 120 0 0.12 0
Atlanta 0 0 0 0 0 70 0.07 0
LA 50 90 0 0 0 0 0.14 0
Demand 0 0 0 0 0 0


Total
Cost
82007.7