ITLS6002 Supply Chain Planning and Design Semester 1, 2021 Network Design Group Assignment: • Group Component (25%) • Individual Component (15%) Due: 28th of May, 2021, 11.59pm The penalty for a late assignment is 10 percent of the possible marks per day. So for example, if you are awarded a mark of 20 out of 25, but submit two days late, you will be penalised 5 marks, and receive a mark of 15. 1. INTRODUCTION The golf industry in Australia is large, with recent estimates indicating that the industry accounts for over a billion dollars of economic activity in tourism, retail, coaching and training1. In fact, Australia is one of the top 10 golfing countries in the world. During the COVID lockdown period, golf was one of the few sports that a person could play and thus the industry has experienced a boom over 20202. This boom, combined with fractured supply chains due to COVID-19 and international border closures, have led to shortages in golf balls across the country (particularly as those new to the sport lose golf balls at an alarming rate). Given the shortages, two innovative Sydney based resin producers, “exlRZN” and “nuResin”, have spotted an opportunity in the market and have decided that if they were to merge operations, they could quickly produce enough high-quality golf balls to supply the market3. With their new technology they also feel confident that once international borders re-open and their new golf has established itself as one of the best in the market, they will be able to export their golf ball globally. Both companies anticipate that, as a merged company, they will achieve considerable cost savings in terms of their logistics operations, and so compete more effectively. They propose to operate under the name “FarSpin” and have engaged your consulting firm to perform the required analysis, design a new network for the merged company, quantify any possible savings, and make recommendations. Currently, both companies have a single plant each in the Sydney region, located in Prestons (exlRZN) and Quakers Hill (nuResin). They will serve a market with two types of customers: • Big golfing retails (Drummond Golf, Golf World and Power Golf) where deliveries are made directly from the plants to the distribution centres (DCs) of the chains, who then manage their own their own distribution to their stores. • A larger number of independently owned small golf stores and pro-shops that are located on golf courses. Deliveries to these locations are to be made in a light commercial van which will make deliveries to multiple customers per delivery run. From their other operations (both companies also produce resins and plastics for other purposes), each company has pre-existing DCs of their own, which they make deliveries too in a heavy truck, while the delivery runs from the DCs to the customers are made with light trucks. The light trucks are more practical for the delivery of relatively small orders to each store, in locations that may not be suited to larger trucks. Indeed, you can assume that as “FarSpin” the merged companies will allow the production and distribution of golf balls to occur in any part of the pre-existing supply chain, in order to make the joint venture as optimal as possible. 1 https://golfbusinessmonitor.com/golf-business/2017/12/australian-golf-industry-2018.html 2 https://www.golf.org.au/golf-rounds-boom-report-reveals/ 3 A golf ball is typically around 3 layers of polybutadiene – a synthetic rubber, covered by a durable thermoplastic (ionomer resin) cover. FarSpin would like your consulting company to complete the following tasks: 1. Optimise the existing facilities of exlRZN and NuResin assuming they are able to service golf ball demand as it stands for the two separate companies (to use as a baseline for performance). 2. Take the existing network and start to optimise it, closing DCs as necessary, and compare the performance to the baseline scenario. 3. Investigate to potential future production scenarios: a) Maintaining joint production at the existing two plants b) Closing these plants and replacing them with a single, higher capacity plant. Management have requested that you to present them with a report, which effectively communicates the solutions that you have arrived at. In addition, they would like to see an Excel file containing your working. 2. AVAILABLE DATA To get you started, FarSpin has provided for you various data that will help you perform your analysis, plus a map to help visualise the situation (See “Map” worksheet of the data file). All of these data are listed in the Excel file “ITLS6002_2021_S1_Assignment_Data.xlsx”. The “Markets” worksheet contains all information about the various customers and market regions, for each company separately (exlRZN and nuResin), and aggregate demand for FarSpin which is simply the sum of the demand for these two companies (the assumption is that the merger will have no impact on demand levels in the short-term). While each company believes that in the longer term the merger will bring about greater returns once they can start to export to international markets, what matters now for this project is whether the merger will bring with it cost advantages with respect to the product distribution in Sydney. • The larger golf retail chain deliveries only need to be made to their DCs, so there are three sets of demand listed (the Drummond Golf DC located at Minchinbury, Power Golf DC at Eastern Creek, and Golf World DC at Prospect). These are marked in orange ( ) on the map. • The smaller customers (independent golf stores and pro-shops located on golf courses) are scattered across the Sydney metropolitan area. To simplify the optimisation process for the purposes of this assignment, the customers are clustered into 23 regions, or “markets”, and aggregate demand is reported for each region. The region is represented by a single location, which represents the approximate centre of the region (i.e. the region’s centroid). These markets/regions are indicated with red markers on the map ( ). • exlRZN and nuResin each have a single existing processing plant, where golf balls are produced (mold the core, form the cover and dimples vis injection molding, polish and paint the cover, cure the golf balls and then package them). There are fixed costs and capacity limits associated with the plants, and these can be found on the “Plants” worksheet. The existing exlRZN plant is highlighted in light blue ( ) while the existing nuResin Plant is in light green ( ). • There is also a plant which is being considered for the merged company FarSpin in Kemps Creek. Note the economies of scale of the FarSpin plant, in terms of the fixed costs. This proposed plant is marked in brown ( ). • exlRZN and nuResin currently have six DCs each. These are listed in the “DCs” worksheet, along with their annual fixed costs. For the purposes of this assignment, you can assume that they do not have capacity limits (although these could be readily imposed). exlRZN DCs are marked in dark blue on the map ( ), while nuResin DCs are marked in dark green ( ). One of the motivations for having a network of DCs is to be more responsive to the customer. If the DCs are too far away from the markets, then the trucks will take a long time to reach the markets, and the reliability of scheduled delivery times is likely to be reduced. Consequently, you are to impose some criteria which ensure a minimum level of responsiveness. It is suggested that you use a maximum distance of 25km. You will need to calculate an approximation of the cost of moving the golf balls through your distribution network. To assist you, you have been provided with estimates of the distance between the plants and large golf retail DCs, between the plants and the exlRZN and nuResin (“company”) DCs, and between the company DCs and the market centroids. These distances are based on a judgement of the most appropriate route for the class of vehicle making the delivery. Given the proximity of many of the facilities to the major Sydney motorways (M7, M4, M5, M2, etc.), and the favourable travel conditions on these roads, these routes make extensive use of the motorways. Toll costs are not considered. For the company DC to market distances, only those distances 25km or less have been made available. There are a variety of ways available to convert the distances to costs. It is suggested that you base these on the capacity of the available truck fleet, and their associated costs, where these data are also available on the “Distances” worksheet. Heavy trucks, which are used for plant to golf retail chain DCs and plant to company DC shipments, have a capacity of 10 tons, and a cost per truck kilometre of $5.50. Light commercial vans, which are used for the delivery runs from the company DCs to the markets, have a capacity of 2 tons, and a cost per truck kilometre of $2.50. This approach requires you to work out the number of shipments per annum based on the annual flows and the truck capacities. The out and back trip costs could be handled. The distances from the company DCs to the market centroids is likely to be only a partial measure of the cost of the associated delivery run. A DC that is a long way from the market will indeed incur extra cost, as the truck must drive to the delivery area, and back again after the deliveries are complete. However, linking together the various customers will also incur a cost. If you decide to model this cost, an average delivery run of 50km is suggested, but you can choose another distance if you wish. 3. ASSIGNMENT DETAILS There is a group component and an individual component to this assignment. 3.1. Group Component Your group is to write a report that analyses a number of scenarios, answering some specific questions for each. • Scenario 1: exlRZN and nuResin continue to operate independently. Existing DCs need not remain open. What is the best network design for each company? What are the total logistics costs associated with each network? • Scenario 2: exlRZN and nuResin merge to form FarSpin. The existing exlRZN and nuResin plants remain open. Any DC can be used for any product sold by the merged company, and decisions must be made about all DCs, specifically, whether to keep them open, or close them. What is the best network design for FarSpin? How does the performance of this network compare to Scenario 1? • Scenario 3: exlRZN and nuResin merge to form FarSpin, and either open and use the larger Kemps Creek plant, or increase the capacity of one of the existing facilities (Prestons or Quakers Hill) and use that facility. For this scenario, use the numbers under the “New/refurbished plants” subheading in the “Plants” worksheet. What is the best network design under this scenario? How does it compare to the previous two scenarios? After running these scenarios, you should give a final recommendation about how FarSpin should proceed, and what network configuration they should use after the merger. 3.2. Individual Component This part of the assignment must be done independently, including completing it separately to your group members. Section 2 of this document has detailed the data that you have available to perform your analysis, and also suggested some assumptions that you can make. There is enough data here to satisfactorily evaluate the above scenarios. However, in addition to evaluating the three scenarios as a group with the data provided, you should individually evaluate one or more of the scenarios using additional (i.e. not merely changed) data, or alternative assumptions. These data could be collected, estimated, or possibly even made up (so long as they are plausible). The aim is to provide a more realistic solution. Part of the individual component is to test your ability to generate new assumptions. 4. GROUP COMPONENT MARKING CRITERIA # Criteria Worth (%) 1 Synopsis 5 2 Introduction 5 3 Description of techniques used 15 4 Technical implementation 30 5 Recommendations regarding scenarios 20 6 Report conclusion 5 7 Presentation (report and Excel) 10 8 Communication and report structure 10 100 Synopsis (5%) • The synopsis should provide a brief description of your recommendations. In effect, I/senior management would like to be able to just read your synopsis and have an understanding of what your key recommendations are. The synopsis must not be more than half a page in length. Introduction (5%) • You are to write a brief but professional introduction to the problem you are facing. Your report is to be written to the managing directors of exlRZN and nuResin. Description of techniques used (15%) • Here you are to briefly describe the methods that you used. It is essential that the reader can gain a clear understanding of what you have done, where you can assume that the reader is educated and interested, but not familiar with the methods that you have used. The client is interested not just in what you recommend, but the methods you have employed. Technical implementation (30%) • All of the calculations should be made available in the Excel file that you submit. You will be marked based on how well the models you construct reflect the network you are trying to optimise, the correctness of your calculations, and the performance of the solutions that you recommend. Recommendations regarding scenarios (20%) • These marks will be awarded based on how well you critically evaluate the performance of the three scenarios, and the soundness of your final recommendation. Report conclusion (5%) • You are to write a brief but professional conclusion based on your findings. This section should summarize what has come before. No new material should be placed in this section. A brief summary of the recommendations should also be included. Presentation (10%) • 10% of grades will be devoted to the quality of the presentation of this component of the assignment, including both the report and the Excel file. Communication and report structure (10%) • Not only are your findings important, but the way you communicate them to management is as well. Marks are awarded for clarity, and for a logical, structured presentation of your findings. You are also required to provide a Table of contents for the report. You are to provide a reference list (NOT a bibliography) if required. Note that the group component is worth 25% of your final marks. 5. INDIVIDUAL COMPONENT MARKING CRITERIA # Criteria Worth (%) 1 Additional data/alternative assumptions 70 2 Communication and report structure 30 100 Additional data/alternative assumptions (70%) • For your individual report, you are free to experiment with alternative data and assumptions. You may be rewarded for the creativity of your solution, for improving the realism of the model, or for extending the scope of what the model can handle. Communication and report structure (30%) • Not only are your findings important, but the way you communicate them to management is as well. Marks are awarded for clarity, and for a logical, structured presentation of your findings. Note that the individual component is worth 15% of your final marks. 6. ASSIGNMENT DELIVERABLES Think about a group name for your consulting team. Your group report and your group Excel file must use that team name as the file name. A group report, with a maximum of 8 pages. • Excludes the title page, synopsis, table of contents, reference list, and appendices). You may include appendices. In writing your report, you are to follow the ‘How to write a paper’ guidebook, which will be posted on Canvas. Your Excel files for the group. • Be sure to make these clear and legible. All important findings should be communicated in your group report. If your group does not submit an Excel file, your group may receive a mark of 0 for the entire group component of this assignment. Minutes of all group meetings that you have. • This group assignment represents a team-based work environment. Consequently, your group should keep minutes of your meetings. The meeting should include the time and date of the meeting, how long the meeting went for, what was discussed, who was allocated what tasks or responsibilities, what tasks were to be completed by whom by the next meeting, and a progress report on any tasks from the previous meeting. These are to be submitted in the appendix of your report as evidence of the contributions (or lack thereof) made by each individual group member. An assessment of the performance of each member of your group. • This is to be submitted individually by each group member. An example of the form you are required to fill out is on the next page of this document (this form will be provided as a separate document as well). An individual report, with a maximum of 2 pages. • You may include appendices. No synopsis or table of contents are required. Your individual Excel files. • Be sure to make these clear and legible. All important findings should be communicated in your individual report. If you do not submit an Excel file, you may receive a mark of 0 for the entire individual component of this assignment. Assignment submission will be via Canvas. Submission instructions will be posted on Canvas closer to the due date. Peer Evaluation Form - ITLS6002 2021 S1 Assignment, Group Component Your Name: ____________ Your SID: Write the name of each of your group members in a separate column. For each person, indicate the extent to which you agree with the statement on the left, using a scale of 1 to 4 (1=strongly disagree; 2=disagree; 3=agree; 4=strongly agree). Total the numbers in each column. If you have any comments to make about a specific group member please write them in the relevant box. Group Name: ______ Names of Group Members: YOU! Attends group meetings regularly and arrives on time. Contributes meaningfully to group discussions. Completes group assignments on time. Prepares work in a quality manner. Demonstrates a cooperative and supportive attitude. Contributes significantly to the success of the project. TOTALS Additional Comments:
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