A distributor of all types of residential construction products (wood, nails, fixtures, appliances, windows, and so on) delivers product directly to the job site. For small jobs, like a single house, they ship in LTL quantities. For large jobs, like an apartment complex, they ship in TL quantities. They sell to customers across the U.S. and use an average TL rate of $0.11 per ton-mile (with a minimum charge of $12.50 per ton) and $0.30 per ton-mile for LTL (with a minimum charge of $4.00 per ton). The model, more details on the case, and directions on how to use it can be found in the file TL and LTL Model for Construction Products.zip on the book web site.
a. In the existing supply chain, they are shipping everything from warehouses in Seattle, Dallas, and Pittsburgh. What is the current cost of this supply chain?
b. If they could pick any warehouses from the list of potential warehouses, what are the best three and what is the cost of the best three? What is the average distance to customers, what is the percentage within 300 miles, and how did the average distance to customer change?