Sourcing decisions

On a prospective basis, an agency can project its source composition and location and their emissions into the future and by the use of mathematical models and statishcal techniques determine what control steps have to be taken now to establish future air quality levels. Since the future involves a mix of existing and new sources, decisions must be made about the control levels required for both categories and whether these levels should be the same or different. 

At the heart of the problem of relating improvements in air quality to reductions in pollutant emission is a reliable method of prediction. Only with such a method can there be rational planning for air pollution control through regulation of transportation, indirect sources, and stationary sources. Decision-makers need it as a tool and must specify it in their regulations. Otherwise, their administration of an air quality plan would be based on sheer guesswork tempered by political negotiation. 

As argued in Chapter 2.1.2 this work focuses on production network design. Demand is assumed to be independent of production network design decisions and the cost structure achieved. Also, unlimited quantities of raw materials are assumed to be available. An extensions to include make-or-buy decisions (and possibly vendor selection) is provided to accommodate application cases where sourcing decisions have to be included. 

Mullin R (2004) Fine Chemicals. Chemical Engineering News -Enterprise of the Chemical Sciences supplement 82 41-19 Mulvey JM, Vanderbei J, Zenios SA (1995) Robust Optimization of Large-Scale Systems. Operations Research 43 264-281 Munson CL, Rosenblatt MJ (1997) The Impact of Local Content Rules on Global Sourcing Decisions. Production and Operations Management 6 277-290... 

Beside technological problems, there may also arise disturbances due to managerial mistakes. The management of integrated production sites encompasses e.g. decisions about financial means, the staff, and stocks of aU materials relevant for the production processes. Financial disturbances include mis-estimations of prices and costs and may lead to inefficient production or sourcing decisions. Uncertainty of workforce occurs from fluctuations in personnel capacity. Disturbances of material supply can occur from two sources Either the local stocks are inappropriate and/or the procurement and distribution processes do not match the realized requirements, e.g. orders are delivered too late or in the wrong quantity/quality. 

Note that unlike the solution in the earlier section, this approach takes account of the cost along the entire path from the plant to the warehouse to the customer zone. However, it still does not account for plant P2 s capacity when making the customer zone sourcing decision. Thus, a possible reason for the absence of a lowest-cost solution for the supply chain is that we may not have allocated plant P2 s capacity optimally across the warehouses. 

Consider possible solutions to the production and sourcing decisions under the above cost structure. 

Now suppose that Europe were to adopt a free trade agreement and drop the import duty. How would the production and sourcing decisions change ... 

Sourcing decision (under Free Trade Agreement with Europe)... 

Next, suppose the German plant has improved its efficiency and hence its production costs have dropped to 0.85 per unit. How would your production and sourcing decisions change What is the value of excess capacity at the German plant under this scenario ... 

Supplier strategic collaboration activities also impact supply chain performance in the Source decision area. These activities include electronic ordering and supplier-managed inventory. In addition, the presence of on-site employees of key suppliers facilitates strategic supplier collaboration activities that enhance overall supply chain performance. 

Munson, C.L. and Rosenblatt, M.J. (1997) The impact of local content rules on global sourcing decisions. Production and Operations Management, 6 (3), 277-290. 

Tyworth, J. E. and A. Ruiz-Torres. 2000. Transportation s role in the sole- versus dual-sourcing decision. International Journal of Physical Distribution and Logistics Management. 30(2) 128-144. 

Multiple sourcing models Multiple sourcing can offset the risk of supply disruption. In multiple sourcing, a buyer purchases the same item from more than one supplier. Mathematical progranuning is the most appropriate method for multiple sourcing decisions. Two types of mathematical programming models are found in the literature, single objective and multiobjective models. 

International transport mode and sourcing decisions Liaison with local sales and marketing management... 

As we have previously noted, many sourcing decisions have led to a migration to low-cost country locations. This often has led to products being moved greater distances. Global sourcing decisions will increasingly need to factor the carbon footprint into the total cost of ownership. 

How sourcing decisions are made is it, for example, competitive tender, auctions, supplier accreditation, and sole source ... 

We now consider key sourcing decisions that are made within a firm. 

IN-HOUSE OR OUTSOURCE The most significant sourcing decision for a firm is whether to perform a task in-house or outsource it to a third party. Within a task such as transportation, managers must decide whether to outsource all of it, outsource only the responsive component, or... 

SOURCING-RELATED METRICS Sourcing decisions have a direct impact on the cost of goods sold and accounts payable. The performance of the source also affects quality, inventories, and inbound transportation costs. A manager should track the following sourcing-related metrics that influence supply chain performance ... 

Identify factors that need to be included in total cost when making global sourcing decisions. 

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