Management Coursework: Supply Chain Management Topic: Exam III or Final

PENN STATE UNIVERSITY ABINGTON
FALL 2020
Subject: Supply Chain Management Topic: Exam III or Final
Instructor: Dr. Joseph Jang
Question 1
1a.
The cost-benefit analysis reflects a systematic strategy utilized to review and evaluate the benefits and costs of activities in supply and logistics. Costs and benefits analysis is done to the investment's feasibility and to explore alternative investment choices of projects with similar outcomes. Its ultimate role validates the costs of each option and associated befits within a given scale and time framing. The costs and risks must be weighed and interact in a way that there is a positive outcome. For instance, it is crucial to analyze the cost of acquiring equipment or machinery against the expected outcomes. If the machinery can bring substantial improvement and productivity, then it justifies the need to acquire such equipment.
b.
The fuel prices have both direct and indirect influence in the logistical industry with its associated supply chain networks. More often, the fuel price fluctuation comes with dynamic influence in the logistical and supply industry. A sudden increase in fuel prices presents deleterious effects on freight and logistics management firms, including reduced profitability and shrinking markets. A rapid fall in prices of fuel causes increases profitability in the short term, but the markets appear to be marked by increasing completion and selling of goods at the lowest prices, which could lead to reduced profitability or cause losses in the long term. When fuel costs rise, the transport will need to raise logistical and transportation costs to cover the cost, leading to a subsequent increase in goods' prices. The fuel costs do not only affect the transport and logistical firms but also the shippers and consumers. In the context of price fluctuation in fuel, the whole logistical chain partners might need to choose transport options that are quite economical. Thus, the higher fuel costs denote equally higher prices passed on to final consumers. Due to the volatility and unpredictability of oil prices, logistical firms must re-strategize their operations to ensure profit sustainability. For example, transport or freight first may decide to keep more inventories to insulate themselves against a speculated spike in fuel prices.
Question 2
A more consistent supply of goods through a reliable transport system improves customer’s experience. The clients or consumers will enjoy a reliable supply of goods without any shortages. Besides, customers can access recently produced goods that have improved quality or upgraded features. However, the primary challenge experiences result from fluctuations in production factors and transport logistical costs, such as a change in fuel prices. These fluctuations result in the alteration of goods and services, such as an increase in cost of goods as a result of increased fuel prices. The higher inventory or greater availability of warehousing facilitates reliable and consistent access to goods by clients or consumers, which improves their experiences. This higher inventory insulates against price fluctuations. Thus, consumers are immune to price changes resulting in a change in productions and transport costs unl...