SUPPLY CHAIN OPTIMATION AT MADURAI AAVIN MILK DAIRY Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

SUPPLY CHAIN OPTIMATION AT MADURAI AAVIN MILK DAIRY Case Solution

With the help of Exhibit 4, the forecast demand of April-11 to Sep-11 is shown below with the demand increasing by 10%.

Ans no. 2

The demand and supply linear models are estimated through regression, which are shown as under

Demand Function

Y = mx + b

Let y = Qd

Qd = mx +b

Here

m = 312.02

b = 294037.9

so,

Qd = 312.02x + 294037.9

Supply Equation

Y = mx + b

Let y = Qs

Qs = mx +b

Here

m = 252.8

b = 238229.78

So,

Qs = 252.8x + 238229.78

The profit maximization is assumed to be at point, where the quantity demanded is equal to the quantity supplied

i.e.

Profit Maximizing Units

Qd = 312.02x - 294037.9

Qs = 252.8x + 238229.78

At profit Maximization, Qd = Qs

312.02x - 294037.9 = 252.8x + 238229.78

312.02x - 252.8x = 238229.78 - 294037.9

59.22x = 532267.7

x = 8987.972

Ans no.3

Since the demand was increasing 10% according to the estimated demand of 2011. The MAMD management must be ready to compromise on all other products sold by them. Since the demand of premium product is greater than raw milk, the management should use recombination. This recombination would increase cost by an average INR 21 per liter. The MAMD has to capacity to store 10000 kg of butter. If the whole butter would use on same day, then there will be no inventory cost.

Ans no.4

If MAMD decided to change the per liter payment for the farmers, then it would be effective, because farmers will be more interested to receive more on the same one liter they were providing before. The increase in payment will increase the supply for the company. It is general phenomena that when the supplier will get a bit higher price for what he is providing then the willing ness to supply the product of supplier will increase. But it is not necessary that the supply will meet the demand of the firm. The MAMD is planning because they want to meet the demand increase, whereas the supply decrease was affecting the business. Though the cost of the company will increase but the supply problem in the firm will decrease. In the solution obtained in part 2 supply will increase by 252.8. As this decision will not affect the part 2 decision. Because the change in the Payment is not that much high that can cover the demanded supply. Because the demand of the consumer will remain same. (Increasing over time).

Ans no. 5

Yes, there will be change in optimal solution as demand was increasing to 30% and 15% respectively. The MAMD have to produce more premium milk and have to decrease the production of raw milk in order to fulfil the demand of people. They should increase the per liter payment to farmers because this will help in producing more milk which could help company to fulfil the demand. This action would increase the cost for company in short run, but it would benefit the company in long run because customers will be satisfied.

Ans no. 6

For MAMD we would recommend the direct method. The managers should focus on the cost reduction, in order to follow this Managers should assign one vehicle for the same area of the farm for the milk collection and also allocate the time frame for the collection of the milk from the farmers. This will reduce the transportation cost and the vehicle will be used at its optimal level.

MAMD should consider that they cannot rely heavily on the external farmers and their milk supply. Because they can create the milk shortage art any time. And can make unions against the company. In order to prevent the company from these issues. Company should start the production and MPSc’s in-house. And make their own farms, hire farmers. This will help the MAMD to increase the supply of the milk. This will create a competitive advantage for the company whereas as compared to the competitors the company will get the competitive advantage over their competitors. Company should go for vertical supply chain model.........................

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SUPPLY CHAIN OPTIMATION AT MADURAI AAVIN MILK DAIRY Harvard Case Solution & Analysis