Senco Electronics Case Study
1. If I were Skip Grenoble, which alternative would you advise Ms. Shannon to implement? What criteria would you use to arrive at your decision?
If I were Skip Grenoble, I would advise Ms. Shannon to utilize air transportation as this would afford Senco greater flexibility and responsiveness in reacting to fluctuations in demand in a high tech industry that is characterized by short product life cycle. As a U.S based contract manufacturer of laptop and personal computers, in my opinion, Senco is providing a fairly high substitutable service. It this case, it then follows that Senco needs to provide higher customer service levels in order to gain repeat customers. Air will provide higher customer
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All in all, the successful utilization of air as oppose to ocean would be a good example of sub optimization as higher costs are undertaken in exchange for greater profits gained from improved customer service.
2. At what level of demand (in pounds) per year would these two alternatives be equal?
At 1,904,761.9 pounds per year of demand these two alternatives will equal each other in total costs, with air being forecasted as being the more expensive option above this level.
3. Graphically represent the two alternatives and their tradeoff point
Tradeoff point = 1,904,761.9 POUNDS
4. Which alternative would you recommend be in place to accommodate future demand growth?
Solely taking a look at the graph, to accommodate future demand for growth I would recommend ocean transportation to move our products from the new facility in China. As we expect demand to grow by 10 percent annually over the next five years, it will be most beneficial to utilize ocean transportation as projected total costs for air becomes higher than ocean above the trade off point of 1,904,761.9 POUNDS. For example, total projected costs were calculated to be at $587,156 for air versus $630,080 for ocean at the end of 5 years. Extrapolate the graph even further into the future, with the expectation of even more growth,
3. What additional information would you like before making this decision, and where might you find that information? (PHBWBL p10, Q5 adapted)
During the 1980s, the air express industry was a medium to attractive industry to already be a major player in, but not a very attractive industry to try and break into. The industry can be characterized by high rivalry from competitors who compete on the same services with very little differentiation, medium power from suppliers who supply the resources necessary to run the business, high buyer power because customers can basically find an equal service from any firm in the industry, low substitution threat from other means of shipping transportation, and low threat of new entrants due to the high initial capital outlay and need of management
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The intent of this analysis is to compare and contrast the cost structures for rail, motor carriers and air modes of transportation. Implicit in this analysis is the rapid adoption of intermodal transportation which is often optimized to specific logistics and supply chain objectives (Jennings, Holcomb, 1996).
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To illustrate this utilizing standard demand and supply, the graph at the end of this assignment can be viewed. The red line, noted as S1, indicates
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2. What recommendation(s) would you make to Mr. Wallace, and in what order of priorities?
Senco Electronics Company (Senco) is a U.S. based manufacturer seeking to evaluate moving its assembly plant to China. Senco is evaluating the cost of operations when transporting via electronics products from china to the U.S. via air or maritime. Currently, total estimated costs for this Case Study are $823,000 for maritime and $800,000 for air with a projected annual demand of 2.5 million pounds from the new facility. Additionally, the Case Study proposes a growth of 5 percent annually over the next five years.