International Logistics & Supply Chain Management
1. ABC organization wants to expand their production capacity and needs space. Management asks you to explore whether the warehousing operations can be shifted to either third party logistics or locate the warehouse outside the premises of the company at a cheaper rate of rent and operational expenses. Explain your recommendation with the cost benefit of both options.
2. You are a Procurement Manager and need to procure 30 lac plastic containers of 100 gm capacity for packing your products. You have two options i.e (1) Procure locally (2) import them. Exporter is willing to give 45 days credit but the minimum order quantity is 15 lac containers. Local manufacturer is willing to give on payment against delivery and the minimum order quantity is 10 lac containers. The landed cost is more or less same in both imported and local procurement. Explain your proposal to the management with the supporting details of your decision.
3. You have to outsource transportation of car glasses for 2 years for your organization . There are 6 types of auto glass on a vehicle: the front Windshield, front and rear door auto glass, vent glass, quarter glass, and back glass. You need two 9 ton trucks which have to be modified to hold these different types of glasses.
Transporter offers two quotes.
i. He will provide two vehicles and modify the vehicles at his cost. The monthly transportation charges would be Rs. 1.2 lacs irrespective of whether you use them or not.
ii. You can buy two vehicles of 9 ton capacity and modify the vehicles. The average monthly cost works out to be Rs. 70,000.
Kindly give your decision on the following:
a. What are the benefits and drawbacks in option (1) and what are the benefits and drawbacks in option (2).
b. Which option you will select and the reasons for the same.