5
S U P P L E M E N T
Sustainability in the Supply Chain
DISCUSSION QUESTIONS
1. Normal (standard) accounting does not fully account for
2. Students can be expected to find numerous web sites such as
this one for S.C. Johnson (http://scjohnson.com/en/commitment/
focus-on.aspx) that provide a substantial presentation of a firm’s
1) Patented Greenlist™: a process that explains how its
Scenario Planning Tool helps product formulators and packaging
engineers identify opportunities for improvements.
recycling, and, ultimately, without the use of incineration.
4) Smaller greenhouse gas footprint: Reducing greenhouse gas
since 2001.
8) Better Lives: extending partnership with USAID and The
Borlaug Institute to help Rwanda pyrethrum farmers boost
incomes and standards of living.
AACSB: Ethical understanding and reasoning
3. Sustainability refers to meeting the needs of the present with-
4. The three Rs are reduce, reuse, and recycle. These concepts
are practiced within the realm of product life cycles. The goal of
life cycle assessment is to make decisions that help reduce the
5. Innovative and sustainably conscious companies are now
designing closed-loop supply chains to include reverse logistics. It
SUPPLEMENT 5 SU STA I N AB I LI TY I N TH E SU P P L Y CH A IN 69
6. Green companies are companies that define environmental
7. Sustainable business practices can be both a tactical and stra-
S5.1
Using the following equation, we can compare the two design
alternatives:
Revenue retrieval =
−
−=
Revenue retrieval for Brew Master = $8.90 + $11.06 $11.10
$3.55 $5.31
S5.2
−
−=
Revenue retrieval for Brew Master = $8.90 + $11.06 $11.10
$3.55 $5.31
S5.3
−−Revenue retrieval for Brew Mini = $7.52 + $10.43 $8.22 $2.20
S5.4
Vehicle purchase cost
$17,000
Vehicle operating cost per mile
$0.12
Useful life of vehicle
Miles per year
14,000
Miles per gallon
Average fuel price per gallon
$3.75
S5.5 The crossover point, in miles, between the hybrid vehicle
in Problem S5.4 and this alternative vehicle from a competing
auto manufacturer:
Vehicle purchase cost
Vehicle operating cost per mile
Useful life of vehicle
Miles per year
14,000
Miles per gallon
Average fuel price per gallon
$3.75
)
(
++
=
=
$
$
$
$
3.75
$17,000 .12 ( )
32
.04 ( ) $2,000
$2,000
.04
gallon
miles mile
gallon
mile
mi
M miles
M
M=50,000
le
miles
70 SUPPLEMENT 5 SUSTA IN ABI LI T Y I N T H E SUP PLY CH A I N
S5.7 In Problem S5.5, gas prices rise to $4.00 per gallon; the
new crossover point, in miles is:
)
(
)
(
)
(
+
=
$
$
$
4.00
$17,000 + .12 ( )
32
.041 ( ) $2,000
gallon
miles mile
mile mile
M miles
M
S5.8 Using the new crossover point in Problem S5.7, the
Resale
Revenue
per Unit
Recycling
Revenue
per Unit
Processing
Cost per
Unit
Disposal
Cost per
Unit
Steel frame
2
1
1
1
Rubber
1
2
1
1
Part
Resale
Revenue
per Unit
Recycling
Revenue
per Unit
Processing
Cost per
Unit
Disposal
Cost per
Unit
Reflective
Rubber
insulation
2
2
1
1
Total
$21
$17
$10
$6
S5.10
(30,000 + 10,000)*16 + 6x = (14,000 + 1,000)*16 + 12x
S5.11
Life cycle: Propane bus = $103,000 + (30,000 miles/year/12mpg)
($1/gal.)(9 years) + (30,000 miles/yr)($.30/mile)(9 years)
= $103,000 + 22,500 + 81,000 = $206,500
S5.12 Using the following equation, we can compare the two
design alternatives:
a) Revenue Retrieval for GF Deluxe = $8.45 + $12.16 – $10.28
S5.13 a) Revenue Retrieval for GF Deluxe = $9.50 + $13.41
– $11.78 – $7.20 = $3.93
based on achieving a higher revenue retrieval opportunity.
S5.14 a) Revenue Retrieval for GF Deluxe = $8.45 + $12.16
– $10.28 – $5.80 = $4.53
S5.15
18,000
$25,000 + ($2.55/ )(10 )
miles
year
miles
gallon years
©¬
ª
ª
ª
S5.16 a) Let M be the crossover point in miles, set each equation
to equal each other, and solve for M.
$
$
2.55
$25,000 .13 ( )
$
.088
gallon
mile
miles
M miles
++
æ
ç
©¬
ª
ª
ª
( ) $4,000
M
ö
÷=
÷
ç÷
÷
1
2
S5.17
S5.18
$
3.00 $
$25,000 .13 ( )
25
gallon
miles
M miles
mile
++
©¬
ª
ª
ª
ª
S5.19
42,105 2.34
m iles
VIDEO CASE STUDIES
BUILDING SUSTAINABILITY AT THE OR-
LANDO MAGIC’S AMWAY CENTER
The 9-minute video, filmed specifically for out text, is available
from Pearson and is designed to supplement this case.
1. There are many well-documented LEED-certified buildings
on campuses and cities around the world that students can select
2. LEED gives 100 possible base points, distributed across 5
major credit categories—Sustainable Sites, Water Efficiency,
◼ Silver: 50–59 points
◼ Gold: 60–79 points
◼ Platinum: 80 points and above
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-
GREEN MANUFACTURING AND
from Pearson and is designed to supplement this case.
1. Although cost is typically the number–one long-term motiva-
tor to reduce resources, Frito-Lay’s investment in solar power is
AACSB: Ethical understanding and reasoning
water, selling by-products such as starch as animal feed, setting
specific goals, using biodegradable packaging, motivating both
managers and employees to get the job done with score cards and
action plans, and, perhaps most important, leveraging top man-
agement leadership.
LO S5.2: Describe sustainability
AACSB: Ethical understanding and reasoning
3. The Walmart case that we provide on our Web site for this
1. How is Walmart doing in terms of social and environmental
sustainability?
Walmart views “environmental sustainability as one of the most
ronment.” Its specific goals in the three areas are as follows:
◼ Renewable energy: Existing stores are to be 20% more
72 SUPPLEMENT 5 SUSTA IN ABI LI T Y I N T H E SUP PLY CH A I N
addition to alternative fuels. Waste refers to packaging and opera-
tions and procurement.
Walmart has launched various experiments and innovations,
building materials and lighting that conserve energy. The
water-source heating, cooling, and refrigeration system is
more energy efficient than the 2005 baseline and reduced
use of refrigerant 90%.
power at 22 locations in Hawaii and California.
◼ Walmart participates in the Blue Skyways Collaborative
◼ “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.
2. Based on library and Internet research, report on other
Walmart sustainability efforts.
3. Compare the firm’s sustainability plan to that of Home Depot,
Target, or another big-box retailer.
focused, (b) recycle focused, (c) regulation focused, and
(d) reputation focused?
facturer, but more than those of smaller, less dedicated
retailers.
◼ Walmart seems to be exceeding regulatory requirements.
◼ Walmart, as its Web site and performance suggest, seems to