Read the following situation and answer the questions given below it. Central Instruments Company (Central) is a US based manufacturer of personal computers and other electronic equipment. Current assembly operations are still located in the US and primarily serve the US market. Transportation in US from Central sites to its customers is primarily performed by motor carriers. Rising costs in its US operations caused Central to evaluate the construction of a new assembly plant in China. Subsequently, Central decided to also consider Vietnam. Mr. Abdul Rasheed, the new executive vice president of supply chain management for Central, is concerned with how Central will transport its products from Asia to the United States. He said that We have had the luxury of a well-developed ground transportation infrastructure in the US to move our products. Now we will be faced with moving enormous quantities of electronic products across several thousand miles of ocean. We really dont have that much experience with other modes of transportation. Mr. Saleem, director of logistics for Central, was called on for his advice. Obviously, we need to decide on whether to use ocean or air transportation to move our products from the new locations. Air transportation will cost more than ocean but will result in lower inventory costs because of the faster transit times. The opposite is true for ocean transportation. Moving products by air will also result in higher ordering costs since we will be ordering more often for replenishment for our US distribution centres. Using either mode will require some fixed investment in loading / unloading facilities at both the new plant and our US distribution centre. Projected annual demand from the new facility is 50,000 AED. However, we expect this demand to grow by 10 percent annually over the next five years. Although the air transportation system appears to be more expensive option right now, we need to take into consideration our growth and how each mode will help us achieve our profit and service goals. The relevant cost information for each alternative is presented in Table 1.

Table -1: Cost information for each mode of transportation of Central Instruments Costs Mode of Transport Ocean in AED) Air (in AED) 200,000 350,000 Total Transportation Costs Inventory Costs 1. Inventory Carrying Costs 2. Inventory Handling Costs 3. Inventory Ordering Costs 52,000 18,000 6,000 500,000 28,000 24,000 12,000 400,000 Fixed Cost Questions: SECTION - 1 (51: ICT Skills-5 Marks, S7: Negotiation Skills-5 Marks) 1. Central Instruments Company would like to implement a supply chain software to manage its distribution and transportation related operations. i) Evaluate the supply chain information requirements for Central and ii) suggest tools which facilitate SC software 5 Marks 2. Explain how Central Instruments should negotiate with the suppliers / providers of transportation and distribution 5 Marks SECTION - 2 (55: Analytical skills-5 Marks, S8: Problem Solving and Decision-Making Skills-5 Marks) 3. Analyse the transportation planning and strategy for Central Instruments and compare modal selection vs. carrier selection 5 Marks 4. Analyse the data in Table-1 to decide which transportation is optimum for Central Instruments. Explain the criteria used by you to arrive at your decision by comparing both the modes. 5 Marks