Question: Dalton Pharmaceuticals enjoys a dominant position in the southea

Dalton Pharmaceuticals enjoys a dominant position in the southeast U.S. with over 800 discount retail outlets. These stores are served by twice-weekly deliveries from Dalton’s 16 warehouses, which are in turn supplied daily by 7 factories that manufacture about 70% of all of the chain’s products. It is clear to Marilyn Helms, VP operations, that an additional warehouse is desperately needed to handle growth and backlogs. Three cities, Mobile, Tampa, and Huntsville, are under final consideration. The table on the shown below illustrates the current and proposed factory/warehouse capacities/demands and shipping costs per average box of supplies.

(a) Based on shipping costs only, which city should be selected for the new warehouse?
(b) One study shows that Ocala’s capacity can increase to 500 boxes per day. Would this affect your decision in part (a)?
(c) Because of a new intrastate shipping agreement, rates for shipping from each factory in Florida to each warehouse in Florida drop by $1 per carton. How does this factor affect your answer to parts (a) and(b)?
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  • CreatedJuly 23, 2013
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