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Supply Chain Management
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Supply Chain Network Design: Applying Optimization and Analytics to the Global Supply Chain 1st Edition
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Chapter 11 ( 2)
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Solution for Supply Chain Network Design: Applying Optimization and Analytics to the Global Supply Chain 1st Edition Chapter 11, Problem 2

by Michael Watson Sara Lewis Peter Cacioppi Jay Jayaraman
106 Solutions 14 Chapters 24033 Studied ISBN: 9780133017373 Supply Chain Management 5 (1)
Chapter 11, Problem 1
Chapter 11, Problem 3

Chapter 11, Problem 2 : 2. If two large companies merge, why might...

2. If two large companies merge, why might you want to run a multi-objective optimization to trade off the total cost of company one versus the total cost to company two? That is, why might this be better than running with just the objective of minimizing the total cost of the combined supply chain?

Step-By-Step Solution

2. When merging two firms, it is often important to simply reduce the total cost of the new and combined supply chain. However, when two firms merge, it is often very important that you keep both businesses running. And, this often means making sure people from both the firms feel like they are peers. One way that firms do this is to make sure that elements from both companies are kept in the new supply chain. So, an objective that trades off the cost of the two companies can help you determine a solution that is relatively low in cost, but keeps elements from both firms. That is, all the savings do not come from just one of the two firms, but are shared.

Of course, knowing the best overall cost helps you understand what you may be giving up.

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