Biopharma Case Study
#1.
In 2009, BioPharma Inc. experienced a significant decline in profits with high costs of production around the world. Due to a stable demand with little room for increased profitability, cutting costs was a top priority for the coming year. Changing and adapting BioPharma’s global production network was thus a priority in order to be successful and eliminate wasteful surplus. BioPharma should have used their production network differently in 2009 in order to be as efficient as possible. Presented first will be how the structure of the current distribution network leads to room for improvement, followed by how exactly BioPharma should go about structuring their distribution network in order to maximize economic surplus.
Factors that need to be considered when evaluating a supply chain network is the location of the distribution/manufacturing facilities, the plant capacity for production, the actual plant production, and the costs of production and distribution. All of these factors are intended and designed to meet customer demand of the product.
In this case, the two particular products being considered are two pharmaceutical chemicals, Highcal and Relax. The costs of producing and distributing this product include fixed costs of the plant, chemical fixed costs, raw materials. production costs, transportation costs to markets, and import tariffs when shipping the product to another country.
The main point of improvement in order to cut costs for BioPharma is dealing with the allocation of matching production to customer demand in the most efficient way possible. The questions to be considered are which plants produce what quantity of chemicals and in what case should the product be imported from another region to maximize surplus. Due to a stable demand for the product across the globe, surplus capacity in Biopharma’s distribution network is not affordable.
However, there are certain assumptions that must be made in order to simplify the
In 2009, BioPharma Inc. experienced a significant decline in profits with high costs of production around the world. Due to a stable demand with little room for increased profitability, cutting costs was a top priority for the coming year. Changing and adapting BioPharma’s global production network was thus a priority in order to be successful and eliminate wasteful surplus. BioPharma should have used their production network differently in 2009 in order to be as efficient as possible. Presented first will be how the structure of the current distribution network leads to room for improvement, followed by how exactly BioPharma should go about structuring their distribution network in order to maximize economic surplus.
Factors that need to be considered when evaluating a supply chain network is the location of the distribution/manufacturing facilities, the plant capacity for production, the actual plant production, and the costs of production and distribution. All of these factors are intended and designed to meet customer demand of the product.
In this case, the two particular products being considered are two pharmaceutical chemicals, Highcal and Relax. The costs of producing and distributing this product include fixed costs of the plant, chemical fixed costs, raw materials. production costs, transportation costs to markets, and import tariffs when shipping the product to another country.
The main point of improvement in order to cut costs for BioPharma is dealing with the allocation of matching production to customer demand in the most efficient way possible. The questions to be considered are which plants produce what quantity of chemicals and in what case should the product be imported from another region to maximize surplus. Due to a stable demand for the product across the globe, surplus capacity in Biopharma’s distribution network is not affordable.
However, there are certain assumptions that must be made in order to simplify the