LogicNet Supply Chain Analysis: 1420664

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

Question one

A baseline evaluation provides information on the situation the company aims to improve or change altogether. It provides an essential reference point for assessing changes and effects, as it establishes a basis for comparing the situation before and after changes are made. The LogicNet baseline data shows the scenario preferences of the company. The company always uses a network design and has no seasonality at any point during the accounting period. The standard currency is dollars, and the base time is in years. All weights and units are measured in pounds, while inventory levels and transportation costs volumes are in square feet. The company’s primary duty zones are the United States of America, Mexico, and China, with more than forty states in the USA. The data shows that the company has six leading suppliers: Madison, Cleveland, Denver, Savannah, Beijing, and Chihuahua, all distributing the same product listed as product one. There are three times in transit profiles for the company whose sources and destinations are all sites within the area but with different transit rates. The company also has a total of twenty warehouses in other states, all located in America. The baseline data shows the company’s various management systems, from plant set management to warehouse capacity management, and supply chain management as a whole.  

The excel data workbook shows all these numerical figures.

1.  The three time in transit profiles are: rail, ship, and Trucking. The profiles are accountable to all sites and all products. Rail has a transit rate of 400, ship 450, and Trucking, 800.
2. The number of warehouses needed for the supply has vividly shown in the tab named: Warehouse Details. All the twenty warehouses are in the USA duty time zone since this is the primary location. For instance, warehouse ID 1 is in Atlanta, with an average inventory of 1 and a local currency of the U.S dollar. Similarly, warehouse ID 20 is in St. Louis MO with similar credentials pertaining to inventory and currency as the first warehouse.
3. The number of warehouses can also be obtained from worksheet named Warehouse Options, where all twenty warehouses have the same default option and are all active. All warehouses have equal capacities in relation to fixed costs among other charges.

Question two

Whether the business is a start-up or one that has been in the industry for a long time, it can always improve. Fine-tuning all the procedures in the company helps a business run more smoothly and save money. It is essential to know and implement ways to improve business operations that will work for the firm. How the company, in this case, can improve its operations are as follows.

1. Outsourcing production to Mexico is more beneficial than changing the location of the warehouses altogether. With outsourcing, the company has a better chance of obtaining more experts. The core team may be fantastic at most things, but outsourcing will ensure that it adds more experts to the team. This way, the company will substantially improve its performance. Another advantage of outsourcing over moving the location of the warehouses is cost reduction. Outsourcing work on a piecewise basis is way cheaper than hiring full-time employees. More reasonable salaries and wages result in higher earnings at the end of a financial year. Outsourcing will also ensure that the firm simplifies its project management department.
2. All in all, outsourcing will ensure that the firm improves its operations. The effect of outsourcing on costs is that costs decline during outsourcing processes. Outsourcing can reduce expenses such as wages payable and office space.
3. The current warehouses are appropriately located to cater to the clients’ needs and requirements. However, the company can expand its customer base by setting up warehouses in other parts of the country. The firm can break the barriers to entry to expand its base, thereby improving operations.
4. The optimum number of warehouses is twenty. An optimum number is the highest number of attainable under particular conditions. Each of the warehouses is specifically structured to tailor the needs of customers in different cities. The warehouses are in Atlanta, Chicago, Reno, Baltimore MD, and New York.
5. System optimization ensures that product flow is more useful to the different warehouses in the various states. The optimization to ensure better production flow includes cutting material costs and improving productivity in the company.
6. Outsourcing production to either Mexico or China will reduce the average distance to customers. The reason behind this is that there will be more warehouses accessible to more customers.

Question three

Recommendations

A sensitivity analysis is a financial paradigm to determine how alterations influence variables in other variables known as the input variables. The model is an efficient way to predict a decision’s result due to changes in a specific range of variabilities. Depending on the company’s option, the production costs in either China or Mexico will ultimately reduce in the long run. Outsourcing is an easy and cost-effective approach widely used by more than 80 percent of the world’s companies. The company, in this case, should practice outsourcing for manufacturing purposes. Cost reduction is an essential advantage of outsourcing. The technique will allow the company to get a lot of work done at a low cost and much more effectively. The job done for a high price in the United States can be obtained at a very cost-effective rate in other countries such as Mexico. The difference may vary to up to 60 percent decline. Outsourcing is, therefore, the most effective recommendation for the company in this case.

Transportation costs are the expenses that a firm incurs when it delivers inventory or other assets on sale to another location or shipping point. Instead of deciding to incur all the transportation costs for the firm personally, the company can choose to outsource transportation. Many firms often overlook the most vital part of the business—getting the order to the client’s destination. Usually, the company bears the cost and responsibility of delivery to consumers; hence it is vital to look at transportation management. In the past, traditional transportation management systems had low visibility within a firm and were kept in-house since it was assumed to be a simple process. Getting the package to the consumer is the most challenging part of the transportation process. By examining the transportation costs at a more in-depth viewpoint and attempting to determine how to be more efficient in the workplace, companies have to seek guidance concerning transportation management. Changes in transportation costs would be beneficial to the company and its operations. Not only would it reduce the total expenses but also increase earnings in the long run. Higher profits will attract investors who will ensure that the company continues in business for a long time.

Other changes in parameters that may impact the model include the disposal costs and inventory volume. The cost of disposal is the additional expenditure attributable to removing an asset or any other entity that generates cash. Disposal cost is a liability in the future that is an expense recorded as it is incurred. The cost of disposal may increase or decline in the company, depending on the choices it makes. On the other hand, inventory volume is the amount of inventory at hand at any time in an accounting period. Outsourcing will most probably keep the inventory levels at the optimum to ensure that customers are satisfied and that there is not much inventory in the warehouses to go wrong.

Question four

An addition to the model to make it more realistic was the warehouse capacity. In theoretical terms, warehouse capacity is the actual physical capacity of space in a company set aside for storage purposes only. In the model, the warehouse capacity is described for each of the twenty warehouses in the different cities. The accommodation also describes the time-period ID and the time period in which the warehouses are utilized in a financial year. The fixer operating cost for each of the warehouses is one million dollars, which is in the United States dollar currency. All the warehouses work all year round. An efficient warehouse management technique offers data to companies that know how to use it to their advantage. It is a practical approach to cater for the company’s warehousing needs since it increases credibility and transparency across the supply chain. Transparent warehouse management provides accurate data that aims at improving the collaboration among the employees in the team. As a result, the company becomes more productive and profitable in the long run. Knowing warehouse capacity increases accuracy in inventory. Through an efficient warehouse management system, knowledge of the warehouse capacity improves stock control and inventory tracking. It also ensures up-to-date stock information with accurate numbers.

Notes

1. Assumptions made

During the analysis, the assumption was that only one type of product was manufactured by the company. The product is named Product 1 in the baseline data and is found in all the warehouses. The company also assumed that only one currency was used across all its zones and warehouses: the U.S. dollar. There was also only one time period in the analysis which was named the Entire Span.

• Parameters and constraints

The parameters included in this assessment were transportation costs, inventory volume, and disposal costs.

• Model description

The model in the above evaluation consists of three primary parts. The baseline analysis which is an in-depth evaluation of the data and numerals before the company makes a decision and changes its activities to optimize production and profitability. Next is the sensitivity analysis which shows the effects of certain changes to the company’s operations. The analysis also describes some recommendations that the company could use altogether to optimize its operations. The last part describes the exact additions to the model and how each of them will either positively or negatively impact the model.

• Shortcomings of the analysis

The assumptions made during the analysis form the basis of its shortcomings. The fact that the model considers only one product in its assessment. If the company may want to add an extra product to its warehouses, the results and effects of adjusting different parameters may differ by a very high margin. The use of one currency is also a shortcoming. If the company would think to expand its horizons to a global viewpoint in the future, it would be quite difficult to operate under the United States dollar only. The sensitivity analysis described above is based on the assumption that changes in variables have been made independently. As a result, the results of the assessment may not be accurate since a change in one variable usually leads to a corresponding change in another, either in the same or different directions. The sensitivity analysis does not consider the probability of alterations.

• Numerical evaluation of alternatives

The numerical evaluation of alternatives involves an assessment of the cost benefit analysis of each of the alternatives. Generally, a cost benefit analysis is an evaluation of the expenditure to income ratio to appraise the best choice of the given options. For instance, if  outsourcing some employees will significantly reduce costs such as office space and wages expenses by approximately 50 percent, the benefit from the outsourcing processes should be more than the 50 percent. Typically, the increase or reduction in expenses must be aligned to a corresponding increase in benefit by a margin more than or equal to the stated one.

If the company decides to outsource, the following instance may help him reach a wise decision:

	If made in the company	If outsourced
Variable production costs (B)	12	4
External costs	–	5
Final sales price (A)	18	16
Contribution Margin(A-B)	6	12

According to the contribution figures, the company should consider the outsourcing alternative.

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).

For the sensitivity evaluation, the contribution Margin needs to decrease by 6 dollars for the decision to be indifferent. That is, the contribution needs to be equal to 6 on both making and outsourcing. Therefore, the sales price only needs to rise by 2 units ( 18 – 16), or ($2/$6 = 33%).