Logistics Scenario

You are the Vice President you have two teams Team #1 Transportation and Team # 2 Logistics (Operations, facilities, Pay, Staff, and employees).

The truck that your company is using is the Kenworth T680, it gets an average of 8 MPG. It has a150 Gallon Tank. Diesel fuel is currently priced at $5.74 a gallon

1. we own 12 tractor and 53' foot trailers. we have 50 employees working for us. Drivers (12) are paid $70K a year. Staff (16) are paid $45K a year, the CEO makes $125K and VP makes ($90K) a year. Workers (20) are paid hourly at 11.00 and hour working 40 hours a week. Other operational cost is about $97K a year.

2. 6 tractors are in excellent condition, 4 are in satisfactory condition (repairs on those tractors are ($50K a year), 2 need to be replaced...three is in the shop now, and one will be out of the shop in two days.

3. We just received a contract (we need to negotiate price with at least a 12% profit margin) to move in (30 days) 27K King James Luxury Chairs (KJLC) to Savannah, Georgia (164 miles one way). Each trailer can only hold 200 chairs.

4. Our distribution Warehouse #1 (staging area) is 7,500 square feet, with more than 33% taken storing and shipping other items-each KJLC takes 9 square feet of our facility. It takes three hours to load one truck in warehouse and 3 hours to unload a trailer.

5. We have another distribution center Warehouse #2 (7,000 square feet) 40 miles away that is 50% full and due to COVID-19, 25% staffed (1 manager and 4 employees). If you use other distribution center (40 miles away) it will take six hours to load one truck due to minimum staffing.

6. Profits look satisfactory, GMC L & T Board only approved $1M dollars to spend for the year (you must divide this by 12 and GMC is already in August and spent $500,127. -Your spending limit is $175K

7. Start thinking about options covered and not covered in class, for example:

8. You cannot stack KJLCs more than two high (they are fragile and expensive).

(a) How much is fuel to transport KJLCs?

(b) What teams does what?

(c ) Horizontal (Contract) or vertical (Channel) Functions or a combination of both?

(e ) how much does GMC L & T ask for in this KJLC contract to cover that month's expenses with at least a 12% profit margin?

(f) How many trucks and trailers can do the job within the time afforded? Or is there a counter proposal?

(g) At what rate do you want KJLCs to enter GMC L & T distribution center (s) to be processed then transported?

(h) Tractor speed to go 300 miles is 60 MPH with (2) two-hour driver rest stops. Once at destination it will take three hours to unload each trailer.

(i)Trucks can only drive speed limit 60mph

(j) have to use D.OT truck driving regulation for driving hours allowed

(k) 27,000 chairs must be transported delivered to savannah each 18 wheeler trailer holds 200 chairs

The CEO approached the Vice President, and she was excited about receiving another transportation contract paying big money, without thinking, she accepted and told the V.P "to make it happen". So, 5 days into transporting KJLCs, The V.P. must divert 4 tractors and trailers to handle another job lasting 15 days. The V.P. smiled and knew adjustments must be made...

BTW 10 days in, two truck drivers tested positive for COVID-19 and must be quarantined...

1. What is the objective?

2. How do we plan?, using what plans?

3. How is effective performance measured? with what metrics?