Draw the supply chain for Houses

In the above diagram, the supply chain of house construction is represented. First, the raw material is delivered to the manufacturing units where the components are manufactured. Than these manufactured units are delivered to the manufacturer to create construction material. Then these materials are distrusted to suppliers from where the material reached the construction site (Cordón, Hald, & Seifert, 2013).

1.      What procurement strategy would HDC adopt for Block and Ready-mix grade 350? (What is the justification?)

The organization should maintain its inventory efficiently so that the production process won’t experience any delay. The reorder point of the inventory should be established so that whenever the inventory reached that point the organization should reorder the material which is required for production (Cordón, Hald, & Seifert, 2013)

2.      What manufacturing strategy would AKC adopt for Block and Ready-mix grade 350? (what is the justification)

Through bringing flexibility in the specifications the organization can improve its production process. With this strategy, the production timing will be reduced and the organization’s efficiency will enhance up to a lot of extents (Gupta, 2016).

3.      What is ROP for Ready Mix grade 250?

The reorder point can be described as the level in the inventory when the organization again refill the inventory. It is the level which the organization maintains in the inventory and when the inventory becomes lower than this level then the inventory is reordered. In the above table, the reorder point of ready mix grade 250 is evaluated. The formula of the reorder point is mentioned in the above table. The reorder point for ready mix grade 250 is 1057. It means that when inventory gets lower than this point the ready mix grade 250 will have to be reordered (Cordón, Hald, & Seifert, 2013).

4.      Block has a high risk (delay probability), what should AEC do to mitigate this risk? What is ROP for Block that mitigates the risk?

As discussed earlier ROP is the level which the organization maintains in the inventory and when the inventory becomes lower than this level then the inventory is reordered. The block has a high delay probability which means that if the inventory of block is not managed appropriately than delay can occur which will ultimately affect the construction of houses. ROP can help the company to mitigate this risk up to a lot of extents. The ROP of the block is 38143. It is the level that the company must maintain for mitigating the risk of delay (Cordón, Hald, & Seifert, 2013).

5.      When the Block quantity reaching ROP, the AEC must order a new quantity. What is EOQ that AEC will order it?

The economic order quantity can be explained as the number of units that the organization should keep in the inventory so that the total cost of inventory can be reduced significantly. If the inventory reached ROP than a new quantity will have to order. The EOQ of block quantity is 6306. It means that if these units are going to be kept in the inventory than the cost of inventory can be reduced up to a lot of extents (Chandra, 2011).

References of Supply Chain Management

Chandra, P. (2011). Financial Management. Tata McGraw-Hill Education.

Cordón, C., Hald, K. S., & Seifert, R. W. (2013). Strategic Supply Chain Management. Routledge.

Gupta, S. M. (Ed.). (2016). Reverse Supply Chains: Issues and Analysis. CRC Press.