The Impact of Change in Oil Price- in

Production Operations and Global Supply

Chain Management

MSC301

Course Instructor:

Md. Tamzidul Islam

13.12.2014

Group members:

Sl. Name I.D.

1 Kazi Tamanna 11104136

2 Samiya Yesmin 11304043

3 Golam Asfia 11304057

4 Rezwone Chowdhury 10204021

5 Mukit Anis 10304061

Historical Trend of Oil Price

IMPACT OF CHANGE IN OIL PRICES ON

PRODUCTIVITY

• 1970s and 1980s global recession.

• Impact of energy prices on the macro economy was not symmetric.

• The role of monetary policy in response to oil price shocks-

▫ Central Banks tighten monetary policy to avoid inflationary effects

▫ Central Bank support economic growth by lowering interest rates

IMPACT OF CHANGE IN OIL PRICES ON

PRODUCTION STRATEGY:

• Switch from dedicated to flexible manufacturing strategy

• Implication on landed cost

IMPACT OF CHANGE IN OIL PRICES ON

LOCATION SELECTION

• Costs of Fractional Distillation

• 40% of Logistics costs is Transportation Cost.

• Tariffs and Trade Barriers.

IMPACT OF CHANGE IN OIL PRICES ON

SUPPLIER SELECTION METHOD

IMPACT OF CHANGE IN OIL PRICES ON MODE

OF TRANSPORTATION

• Regional distribution centers became more attractive.

• Manufacturing and sourcing activities will move to "near shoring."

• Supply chain flexibility has become the focus of an organization.

IMPACT OF CHANGE IN OIL PRICES ON

DISTRIBUTION STRATEGY

IMPACT OF CHANGE IN OIL PRICES ON

INVENTORY MANAGEMENT• Larger shipment required • Need for larger warehouse • Emphasis on push- based strategy • Need for better inventory positioning • Two fold effect on the supply chain:

▫ rise in lot size▫ increase in safety stock

ETHICAL IMPLICATIONS

• “The Chinese will be very big in oil market and that is going to lead to some interesting political situations”

-Steven Kopits, the Managing director of Douglas Westwood

• In Bangladesh

▫ Corruption and Monopoly

▫ Importing with higher prices

• International Situation

▫ Artificial boundaries

▫ Preset prices

▫ Once again , monopoly

• Indian Taxi Boom

▫ International price fall

▫ Taxi boom

ETHICAL IMPLICATIONS

ENVIRONMENTAL IMPLICATIONS:

OIL EARTH AND HUMANITY

• Cheap fuel and industry waste.

• Oil Spills

Thank you!