BioPharma Inc

BioPharma Inc. Network Configuration

BioPharma Inc. Network Configuration

Executive Summary

The company was facing some serious challenges in the operations of its business. The company had noticed a sharp decline in the profitability of the company. As the group is spread across continents, it was finding hard to coupe up we rising cost at its plants in Japan, and Germany. The management had noticed that overall the demand of the company's products has been stable while in Asia, excluding Japan, the sales are set to grow by 10 percent annually. The management was focused on the idle inventory and capacity within in its network and was considering different options to reduce the surplus inventory. We can conclude that the company the devised strategy and model will reduce the company's overall cost of operations. In the long term as the Asian Market is set to grow, the company should relocated its excess capacity from Germany and United States to Asian region, particularly as its has low cost of operations. The company still needs a comprehensive analysis as it has not included the variability of lead and production times, the political and social environment, has not ascertain the facts of no production at places where there are high demands of the product like Germany. Our suggestion made in this report are as per the assumptions provided and as discussed, more analysis of variables are needed to create a comprehensive plan of cost reduction without losing the competitive edge or operational efficiency.

Table of Contents

Executive Summary2

Table of Contents3

List of Figures4

List of Tables5

Background6

Objectives6

Issues Identified7

As-is Situation7

Optimized Situation8

Answers to the Case Questions9

Recommendations13

Conclusions13

References15

Appendices15

List of Figures

Figure 1 Optimization solution by using MS Solver.16

Figure 2 As-is solution by using MS Solver16

List of Tables

Table 1 Total Cost of Current Network Configuration17

Table 2 Total Cost of Revised Network Configuration17

Table 3 Question 7 Answer Table18

Background

Global manufacturer of chemicals in bulk, BioPharma Inc., provides the chemicals to the pharmaceutical industry and also utilizes it's for its own manufacturing. The company owns the patents of Highcal and Relax for internal production. The internal pharmaceutical division utilizes these chemical and they sell excess quality to other companies. Every part of the world requires chemicals with difference in specifications. All plants can produce both types of chemicals and for any international destination. The plant can be asked to produce one type of product only it keeps it the capability of making both types of products. Except in the Asia excluding Japan, where the demand forecast will remain increasing by 10% annually of over approximately 5years, all other locations are have stable demand.

Among all the plants the Japanese plant enjoys technical edge over others and has successfully overcome regulatory and environmental issues. The creations carried out in the Japanese plant have been transferred to other plants in the group. The production capacity of German plant is unmatched in the whole network of plants. The plants located in developing markets like Brazil, India and Mexico is working with some outdated machinery which the management considers to be replaced in the ...