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SUPPLEMENT 5 SUSTA IN ABIL IT Y I N TH E SU P PL Y CH AI N 65
1
Miles per gallon
32
Average fuel price per gallon
$3.75
(
14,000
$17,000 + ($3.75 / )(15 )
32
14,000 ($.12 / )(15 ) $17,000
$24,609 $25,200 $66,809
miles
year
miles
gallon
miles
year
gallon years
mile years
+=
+ + =
S5.5 The break-even point, in miles, between the hybrid vehicle
in Problem S5.4 and this alternative vehicle from a competing
auto manufacturer:
Vehicle purchase cost
$19,000
Vehicle operating cost per mile
$0.09
Useful life of vehicle
15
Miles per year
14,000
Miles per gallon
35
Average fuel price per gallon
$3.75
Let M be the break-even point, in miles. Set the equations to equal
each other and solve for M:
)
(
)
(
)
(
++
= + +
+ = +
=
=
$
$
$
$
$$
$
$
3.75
$17,000 .12 ( )
32
3.75
$19,000 .09 ( )
35
$17,000 .237 ( ) $19,000 .197 ( )
.04 ( ) $2,000
$2,000
.04
gallon
miles mile
gallon
gallon
miles mile
gallon
mile mile
mile
mi
M miles
M miles
MM
M
M=50,000
le
miles
S5.6 For Problem S5.5, the payback period in years:
50,000 3.57
14,000miles
year
miles
Payback period years==
S5.7 In Problem S5.5, gas prices rise to $4.00 per gallon; the
new break-even point, in miles is:
)
(
)
(
)
(
+
= + +
=
=
$
$
$
$
$$
$
4.00
$17,000 + .12 ( )
32
4.00
19,000 .09 ( )
35
.041 ( ) $2,000
$2,000
.041
gallon
miles mile
gallon
gallon
miles mile
gallon
mile mile
mile
M miles
M miles
M
M=
$48,780
mile
miles
S5.8 Using the new break-even point in Problem S5.7, the pay-
back period is:
48,780 3.48
14,000m iles
year
miles
Payback period years==
S5.9
PG Glass
Part
Resale
Reve-
nue per
Unit
Recy-
cling
Revenue
per Unit
Pro-
cessing
Cost per
Unit
Disposal
Cost per
Unit
Glass
$12
$10
$6
$2
Steel
frame
2
1
1
1
Rubber
insulation
1
2
1
1
Total
$15
$13
$8
$4
Glass Unlimited
Part
Resale
Revenue
per Unit
Recycling
Revenue
per Unit
Processing
Cost per
Unit
Disposal
Cost per
Unit
Reflective
glass
$15
$12
$7
$3
Aluminum
frame
4
3
2
2
Rubber
insulation
2
2
1
1
Total
$21
$17
$10
$6
(15 13) (8 4) 28 12 $16
(21 17) (10 6) 38 16 $22
Revenue forPG glass
Revenue forG lassUnlim ited
= + − + = − =
= + − + = − =
This analysis suggests that Glass Unlimited is best for revenue
retrieval.
VIDEO CASE STUDIES
BUILDING SUSTAINABILITY AT THE OR-
LANDO MAGIC’S AMWAY CENTER
The 9 minute video, filmed specifically for out text, is available
1. There are many well-documented LEED-certified buildings
on campuses and cities around the world that students can select
to compare with the Amway Center features.
2. LEED gives 100 possible base points, distributed across 5
major credit categories—Sustainable Sites, Water Efficiency,
66 SUPPLEMENT 5 SUST AINABIL IT Y IN TH E SU P PLY CH AI N
Environmental Quality—plus an additional 6 points for Innova-
tion in Design and an additional 4 points for Regional Priority.
Buildings can qualify for four levels of certification:
3. The Orlando Magic’s Amway Center went green for many of
the same reasons other major projects do: (1) to be a good com-
munity member/partner; (2) for energy efficiency; (3) to provide a
showcase building to help revitalize the downtown; (4) for less
construction waste; (5) to encourage patrons/workers to drive
1. Although cost is typically the number-one long-term motiva-
tor to reduce resources, Frito-Lay’s investment in solar power is
not yet a cost saver. Being on the cutting edge of being “green”
may help with advertising and public relations, but a positive
2. Techniques the firm is using to become a green manufactur-
er include using solar power to generate electricity, recycling
water, selling by-products such as starch as animal feed, setting
specific goals, using biodegradable packaging, motivating both
3. The Walmart case that we provide on our Web site for this
chapter provides an excellent parallel with actions by a manufac-
turer (Frito-Lay) and a retailer (Walmart).
1. How is Walmart doing in terms of social and environmental
sustainability?
Walmart views “environmental sustainability as one of the most
important opportunities for both the future of our business, and
the future of our world.” Everyday low prices is the vision that
low costs. Its environmental vision is equally clear: “to be sup-
plied 100 percent by renewable energy; to create zero waste; and
to sell products that sustain our natural resources and the envi-
ronment.” Its specific goals in the three areas are as follows:
packaging that uses reusable materials.
◼ Sustainable resources and the environment: Walmart’s
goal is 20% of the supply base aligned in 3 years as well
as the design and support of a Green Company program
in China.
tions and procurement.
Walmart has launched various experiments and innovations,
including the following:
water-source heating, cooling, and refrigeration system is
completely integrated. The company included ordinary
innovations such as low-flow bathroom faucets and LED
lights and also adopted an advanced daylight harvesting
system and used white roofs.
along with other sustainable techniques, made it 25%
more energy efficient than the 2005 baseline and reduced
use of refrigerant 90%.
◼ Walmart is purchasing solar power equipment at a rate
Interstate 35 (from Mexico to Canada) that have joined
forces to reduce pollution.
◼ “Sandwich baling” refers to placing loose plastic between
layers of cardboard for recycling. This reduces waste nor-
mally sent to landfills and generates income for Walmart.
◼ Walmart works to reduce packaging. For example, its
Copyright ©2014 Pearson Education, Inc.
1. Improved wind skirts to reduce wind resistance
around the trailer
2. A rear axle single wheel that is smaller than the sum
of the two wheels it replaced
3. A more aerodynamic tractor
In addition to the above information, students should note
that Walmart is taking a very aggressive position regarding
2006ReportionEthicalSourcing.pdf and A. Zettlemoyer-Lazar,
and R. A. Parvis, “EPA Resource Conservation Challenge Web
Academy. Recycling and Solid Waste Management Educational
4. How much of Walmart’s sustainability effort is (a) resource
focused, (b) recycle focused, (c) regulation focused, and
(d) reputation focused?
Walmart is making efforts is all four areas:
◼ Its resource focus is somewhat less than that of a manu-
SUPPLEMENT 5 SUSTA IN ABIL IT Y I N TH E SU P PL Y CH AI N 65
1
Miles per gallon
32
Average fuel price per gallon
$3.75
(
14,000
$17,000 + ($3.75 / )(15 )
32
14,000 ($.12 / )(15 ) $17,000
$24,609 $25,200 $66,809
miles
year
miles
gallon
miles
year
gallon years
mile years
+=
+ + =
S5.5 The break-even point, in miles, between the hybrid vehicle
in Problem S5.4 and this alternative vehicle from a competing
auto manufacturer:
Vehicle purchase cost
$19,000
Vehicle operating cost per mile
$0.09
Useful life of vehicle
15
Miles per year
14,000
Miles per gallon
35
Average fuel price per gallon
$3.75
Let M be the break-even point, in miles. Set the equations to equal
each other and solve for M:
)
(
)
(
)
(
++
= + +
+ = +
=
=
$
$
$
$
$$
$
$
3.75
$17,000 .12 ( )
32
3.75
$19,000 .09 ( )
35
$17,000 .237 ( ) $19,000 .197 ( )
.04 ( ) $2,000
$2,000
.04
gallon
miles mile
gallon
gallon
miles mile
gallon
mile mile
mile
mi
M miles
M miles
MM
M
M=50,000
le
miles
S5.6 For Problem S5.5, the payback period in years:
50,000 3.57
14,000miles
year
miles
Payback period years==
S5.7 In Problem S5.5, gas prices rise to $4.00 per gallon; the
new break-even point, in miles is:
)
(
)
(
)
(
+
= + +
=
=
$
$
$
$
$$
$
4.00
$17,000 + .12 ( )
32
4.00
19,000 .09 ( )
35
.041 ( ) $2,000
$2,000
.041
gallon
miles mile
gallon
gallon
miles mile
gallon
mile mile
mile
M miles
M miles
M
M=
$48,780
mile
miles
S5.8 Using the new break-even point in Problem S5.7, the pay-
back period is:
48,780 3.48
14,000m iles
year
miles
Payback period years==
S5.9
PG Glass
Part
Resale
Reve-
nue per
Unit
Recy-
cling
Revenue
per Unit
Pro-
cessing
Cost per
Unit
Disposal
Cost per
Unit
Glass
$12
$10
$6
$2
Steel
frame
2
1
1
1
Rubber
insulation
1
2
1
1
Total
$15
$13
$8
$4
Glass Unlimited
Part
Resale
Revenue
per Unit
Recycling
Revenue
per Unit
Processing
Cost per
Unit
Disposal
Cost per
Unit
Reflective
glass
$15
$12
$7
$3
Aluminum
frame
4
3
2
2
Rubber
insulation
2
2
1
1
Total
$21
$17
$10
$6
(15 13) (8 4) 28 12 $16
(21 17) (10 6) 38 16 $22
Revenue forPG glass
Revenue forG lassUnlim ited
= + − + = − =
= + − + = − =
This analysis suggests that Glass Unlimited is best for revenue
retrieval.
VIDEO CASE STUDIES
BUILDING SUSTAINABILITY AT THE OR-
LANDO MAGIC’S AMWAY CENTER
The 9 minute video, filmed specifically for out text, is available
1. There are many well-documented LEED-certified buildings
on campuses and cities around the world that students can select
to compare with the Amway Center features.
2. LEED gives 100 possible base points, distributed across 5
major credit categories—Sustainable Sites, Water Efficiency,
66 SUPPLEMENT 5 SUST AINABIL IT Y IN TH E SU P PLY CH AI N
Environmental Quality—plus an additional 6 points for Innova-
tion in Design and an additional 4 points for Regional Priority.
Buildings can qualify for four levels of certification:
3. The Orlando Magic’s Amway Center went green for many of
the same reasons other major projects do: (1) to be a good com-
munity member/partner; (2) for energy efficiency; (3) to provide a
showcase building to help revitalize the downtown; (4) for less
construction waste; (5) to encourage patrons/workers to drive
1. Although cost is typically the number-one long-term motiva-
tor to reduce resources, Frito-Lay’s investment in solar power is
not yet a cost saver. Being on the cutting edge of being “green”
may help with advertising and public relations, but a positive
2. Techniques the firm is using to become a green manufactur-
er include using solar power to generate electricity, recycling
water, selling by-products such as starch as animal feed, setting
specific goals, using biodegradable packaging, motivating both
3. The Walmart case that we provide on our Web site for this
chapter provides an excellent parallel with actions by a manufac-
turer (Frito-Lay) and a retailer (Walmart).
1. How is Walmart doing in terms of social and environmental
sustainability?
Walmart views “environmental sustainability as one of the most
important opportunities for both the future of our business, and
the future of our world.” Everyday low prices is the vision that
low costs. Its environmental vision is equally clear: “to be sup-
plied 100 percent by renewable energy; to create zero waste; and
to sell products that sustain our natural resources and the envi-
ronment.” Its specific goals in the three areas are as follows:
packaging that uses reusable materials.
◼ Sustainable resources and the environment: Walmart’s
goal is 20% of the supply base aligned in 3 years as well
as the design and support of a Green Company program
in China.
tions and procurement.
Walmart has launched various experiments and innovations,
including the following:
water-source heating, cooling, and refrigeration system is
completely integrated. The company included ordinary
innovations such as low-flow bathroom faucets and LED
lights and also adopted an advanced daylight harvesting
system and used white roofs.
along with other sustainable techniques, made it 25%
more energy efficient than the 2005 baseline and reduced
use of refrigerant 90%.
◼ Walmart is purchasing solar power equipment at a rate
Interstate 35 (from Mexico to Canada) that have joined
forces to reduce pollution.
◼ “Sandwich baling” refers to placing loose plastic between
layers of cardboard for recycling. This reduces waste nor-
mally sent to landfills and generates income for Walmart.
◼ Walmart works to reduce packaging. For example, its
Copyright ©2014 Pearson Education, Inc.
1. Improved wind skirts to reduce wind resistance
around the trailer
2. A rear axle single wheel that is smaller than the sum
of the two wheels it replaced
3. A more aerodynamic tractor
In addition to the above information, students should note
that Walmart is taking a very aggressive position regarding
2006ReportionEthicalSourcing.pdf and A. Zettlemoyer-Lazar,
and R. A. Parvis, “EPA Resource Conservation Challenge Web
Academy. Recycling and Solid Waste Management Educational
4. How much of Walmart’s sustainability effort is (a) resource
focused, (b) recycle focused, (c) regulation focused, and
(d) reputation focused?
Walmart is making efforts is all four areas:
◼ Its resource focus is somewhat less than that of a manu-
