Scenario: You are the Supply Chain Manager for Caterpillar’s Paver Manufacturing Division located in Peoria, Illinois. Management has asked you to support increased production of Paver Model P-202. Paver P-202 requires a critical part – number 1A1- for each unit. Production of P-202 is increasing from 45 units per day to 90 units per day over the next 12 months. You have three options to consider: 1. Build a larger warehouse

2. Bring on a second supplier in China. 1A1 cost from this supplier is $15.00. The current supplier located in Indiana has a price of $25.00. Lead time from China is 9 weeks. Lead time from Indiana is 1 day. The Indiana supplier keeps a safety stock of 2 weeks supply. They can only increase production by 25%.

3. Change the material flow into the warehouse and manufacturing plant. This would include new ideas related to the flow of parts from your supplier(s) through the warehouse and into manufacturing. Kan Ban methodology is used. The Kan Ban tub capacity is 90 units of 1A1.

Problem to be solved: Your job is to come up with recommendations for management to consider.

Notes: This activity should help students understand what types of situations develop in the real world of manufacturers. It will also teach them the supply chain concept and should help them understand how important the process is in fulfilling society’s daily needs. One important piece of learning in the le is the fact that the problem does not have one clear answer. Rather, it provides an opportunity for the student to think creatively in how to balance the warehouse, pricing, and inventory issues. Using Caterpillar is a good example of a global company. Important manufacturing activity is still in the U. S. A With a lot of manufacturing moving off-shore, the demand for logistics and supply chain people will continue to grow in the U. S.