+1 862 207 3288 QUESTION 1.Case 9-1 discusses Young Again Pharmaceuticals. The three options that this firm has to manage risk are risk
retention, risk transfer, or a mixed approach. In 200 – 250 words, discuss your recommendations on how this company
should evaluate and implement these techniques to manage risks.
QUESTION 2.Given your answer to Discussion Forum 1, discuss in 200 – 250 words what you believe Young Again
Pharmaceuticals should focus on once the risks are mitigated.
CASE 9-1 Young Again Pharmaceuticals
Cliff Crandall, senior director of transportation for Young Again Pharmaceuticals (YAP), is gearing up for his company’s
most critical product rollout in more than a decade. YAP has developed a breakthrough liquid suspension that reverses the
ageing process for anyone over 35 years of age. Available only by prescription, the new product has been dubbed
“Twenty-something in a Bottle” by the media. Demand is expected to be very high despite the outlandish price tag of $395
for a month’s supply.
The product is being manufactured in YAP’s San Juan, Puerto Rico laboratory and will be distributed to major retail
pharmacies in the United States and Canada. Crandall is responsible for selecting the mode and contracting with carriers
to deliver the product. He is concerned about the safe and timely delivery of the initial product shipments in May to the
retailers’ distribution centers. The product is high value, somewhat fragile, and of interest to thieves. Some product,
stolen from the laboratory, has already appeared on auction websites.
In an effort to make effective transportation decisions and minimize YAP’s risks, Crandall decided to hold a
brainstorming session with his logistics team before signing any carrier contracts. The discussion of key risks produced
the following list of concerns:
• • “If shipments are late or incomplete, retailers will penalize us with vendor chargebacks. You know they will
hit us with small fines for delivery mistakes.”
• • “I’m worried about shipment delays or freight loss from hurricanes in the Atlantic Ocean.”
• • “You’ve got to consider temperature sensitivity issues. If the product freezes, we won’t be able to sell it.”
• • “I’ve been reading about all the piracy problems experienced by ocean carriers. You know, a 20-foot container
of our product has a retail value of nearly $275,000.”
• • “I’m more concerned about theft of individual cases at ports and while the product is on the road.”
• • “We’re looking at border delays and Customs fines if we don’t properly document and mark our freight.”
• • “Our brand image will take major damage if the product gets into unauthorized distribution channels due to
theft or misdirected deliveries.”
• • “The company sustainability push has led to reduced packaging and biodegradable packing materials. If the
cartons get wet or bounced around, we’re going to end up with a lot of damaged, unsellable product.”
• • “Those major East Coast ports can get very congested during peak shipping season. That will cause delays.”
By the time the meeting was over, Crandall realized that he needed to spend some time looking into these issues. While he
was pretty sure that some problems were remote, Crandall thought that it would be wise to evaluate each one. His new
concern became how to conduct an effective risk assessment.
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