Supply Chain Management (100 points) Al Baik must ship replacement parts for their ovens, and the...

Question

Supply Chain Management (100 points)

Al Baik must ship replacement parts for their ovens, and the supply chain manager must choose between two shipping alternatives: two-day freight, and five-day freight. Using five-day freight saves 750 Riyal (SAR), but the primary consideration is holding cost, which is 38 Riyal per unit per year. Al Baik must ship 2000 units. In a 4-5-page paper, which alternative would you recommend to the supply chain manager and why?

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Sourav Kumar · Accepted Answer

Running Head: SUPPLY CHAIN MANAGEMENT
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SUPPLY CHAIN MANAGEMENT
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SUPPLY CHAIN MANAGEMENT
Table of Contents
Introduction	3
Situation	3
Available options and its consequences	4
Choosing the best option	5
Conclusion	5
References	7
Introduction
The ovens are an important aspect of everyday life so for a customer having some defect in the oven means cannot cook food and a supply chain manager is responsible for fixing this kind of customer issues. A supply chain manager is also responsible for properly calculating the profit or loss ratio for shipping their products and trying to earn and save as much money as possible. In this case, it is evident that for shipping the oven parts by Al Baik supply chain management there are mainly two alternative ideas one is two-day freight while another option is the five-day freight. 
Situation
In this case, we can see that the holding cost for each of the oven items is 38 riyal.  So for a bulk production, this holding cost in the inventory may lead to a huge expense for the company. As a result, to solve the problem these over parts really need to be delivered in time and think of the customer satisfaction as a happy customer means more business in future. It is a very common phenomenon for the supply chain managers to deliver the products as soon as possible to avoid the holding cost of the items.
According to Monczka (2015), a customer expects a certain quality of product from the company, and it is the duty of the company to provide them with the best possible products without compromising the quality of it for earning more revenues. This ultimately deceives the customers and with time may result in the loss of reputation and business. Suppose the delay in the oven parts will hinder the production line so using another grade of parts to speed up the production means deceiving the customers from the original grade of the product. In the long run, the regular customers can understand the difference in the product grade and might stop their business.

Supply Chain Management (100 points) Al Baik must ship replacement parts for their ovens, and the supply chain manager must choose between two shipping alternatives: two-day freight, and five-day...

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