Strategic Supply Chain and Bid Evaluation for a Multi-Facility Cleaning Fluid Contract
Abstract
<h2>Cover Page</h2> <p>Strategic Supply Chain and Bid Evaluation for a Multi-Facility Cleaning Fluid Contract</p> <p>Student</p> <p>Institution</p> <p>Course</p> <p>Instructor</p> <p>Date</p> <h2>Executive Overview of the Contract Bidding Evaluation</h2> <p>This report aims to provide recommendations for Company A in preparing a bid for a contract to supply cleaning fluid to locations where railroad locomotives are cleaned. The report discusses which production facility, Cincinnati or Oakland, should be used to supply the cleaning fluid, how much should be shipped from each facility to each location, the breakeven point for Company A, and the potential effects of fluctuating freight costs on the bid. A standard 15% markup is used to determine the proposed bid amount. Overall, the report concludes that careful consideration of all factors is necessary for Company A to bid successfully on the contract and potentially earn a profit.</p> <h2>Operational Context and Principal Supply Chain Decisions</h2> <p>Company A supplies cleaning fluid to locations where railroad locomotives are cleaned. The company has two production facilities, one in Cincinnati and one in Oakland. Company A has been asked to prepare a bid for a contract to supply cleaning fluid to multiple locations. To bid successfully on the contract and potentially earn a profit, the company must carefully consider several factors. This report aims to provide recommendations to Company A in preparing its bid, including which production facility should be used to supply the cleaning fluid, how much should be shipped from each facility to each location, the breakeven point for the company, and the potential effects of fluctuating freight costs on the bid.</p> <h2>Selection of the Most Appropriate Production Facility</h2> <p>To determine which production facility, Cincinnati or Oakland, should supply the cleaning fluid, Company A should consider several factors. These may include the proximity of each facility to the locations where the cleaning fluid will be shipped, the production capacity of each facility, the cost of transportation from each facility, and any potential savings from producing the cleaning fluid at a single location rather than multiple locations (Nardi, 2018).</p> <p>For example, if the locations where the cleaning fluid will be shipped are closer to the Oakland facility than the Cincinnati facility, it may be more cost-effective to produce the cleaning fluid at the Oakland facility and ship it to the locations from there. Similarly, if the Oakland facility has a higher production capacity than the Cincinnati facility, it may be more efficient to produce the cleaning fluid at the Oakland facility to meet the demand of the contract. On the other hand, if the Cincinnati facility has lower production costs or can offer potential savings from producing the cleaning fluid at a single location, it may be more advantageous for Company A to use the Cincinnati facility for the contract.</p> <h2>Allocation of Shipment Quantities Across Contract Locations</h2> <p>Once the production facility has been determined, the next step is to determine how much cleaning fluid should be shipped from each facility to each location. Company A should carefully consider the demand for cleaning fluid at each location, as well as any potential savings from shipping larger quantities at once (Lo et al., 2020). For example, if the demand for cleaning fluid is higher at certain locations, it may be necessary to ship larger quantities of cleaning fluid to those locations to meet the demand. On the other hand, if shipping larger quantities at once can offer potential savings in transportation costs, it may be more cost-effective for Company A to ship larger quantities to each location.</p> <h2>Breakeven Analysis and Application of the Standard Markup</h2> <p>The breakeven point for Company A is the point at which the company’s revenue from the contract is equal to its costs. To determine the breakeven point, Company A should carefully consider all the costs associated with the contract, including the cost of producing the cleaning fluid, the cost of transportation, and any other associated costs (Rowan & Laffey, 2020). To determine how much Company A should bid if it wants to use a standard 15% markup, the company should first calculate the total cost of the contract, including the cost of producing the cleaning fluid, transportation costs, and any other associated costs. This total cost can then be increased by the 15% markup to determine the proposed bid amount. For example, if the total cost of the contract is $100,000, a 15% markup would result in a proposed bid amount of $115,000 ($100,000 × 15% = $15,000; $100,000 + $15,000 = $115,000). This amount would allow Company A to cover its costs and earn a profit if it is awarded the contract.</p> <h2>Management of Freight-Cost Volatility During the Contract Period</h2> <p>The price of oil can significantly affect freight costs, and because the contract on which Company A is bidding is for two years, fluctuations in freight costs may potentially affect the bid that the company submits (Gilsing et al., 2021). To mitigate the potential effects of fluctuating freight costs, Company A may consider incorporating a variable transportation cost into its bid. For example, if the price of oil is expected to increase during the contract period, Company A could include a variable transportation cost that would allow it to adjust the bid amount accordingly. This would allow the company to account for any potential increase in freight costs and ensure that it can continue earning a profit if the price of oil increases.</p> <h2>Integrated Supply Chain and Contract Bidding Considerations</h2> <p>Clearly, Company A must carefully consider several factors when preparing its bid for a contract to supply cleaning fluid to locations where railroad locomotives are cleaned. These factors include which production facility should be used to supply the cleaning fluid, how much should be shipped from each facility to each location, the breakeven point for the company, and the potential effects of fluctuating freight costs on the bid. By carefully considering these factors and using a standard 15% markup, Company A can submit a competitive and potentially profitable bid for the contract.</p> <h2>References</h2> <p>Gilsing, R., Turetken, O., Ozkan, B., Grefen, P., Adali, O. E., Wilbik, A., & Berkers, F. (2021). Evaluating the Design of Service-Dominant Business Models: A Qualitative Method. Pacific Asia Journal of the Association for Information Systems, 13(1). https://doi.org/10.17705/1pais.13102</p> <p>Lo, F.-Y., Rey-Martí, A., & Botella-Carrubi, D. (2020). Research methods in business: Quantitative and qualitative comparative analysis. Journal of Business Research, 115(12), 221–224. https://doi.org/10.1016/j.jbusres.2020.05.003</p> <p>Nardi, P. M. (2018). Doing Survey Research. Routledge. https://doi.org/10.4324/9781315172231</p> <p>Rowan, N. J., & Laffey, J. G. (2020). Challenges and solutions for addressing critical shortage of supply chain for personal and protective equipment (PPE) arising from Coronavirus disease (COVID19) pandemic – Case study from the Republic of Ireland. Science of the Total Environment, 725(1), 138532. https://doi.org/10.1016/j.scitotenv.2020.138532</p>