$1.$ Based on the case study "Dollar Tree Logistics" $($attached are the images from the article and some of their financial charts$)$DOLLAR TREE LOGISTICS

On a chilly morning in January $2005,$ Stephen White, Chief Logistics Officer of Dollar

Tree Stores, Incorporated $($Dollar Tree$)$ sat in his unpretentious office, which was decorated with

framed pictures of Dollar Tree distribution centers $($DCs$)$ on the walls. White reflected upon the

past year's logistics performance for the Chesapeake, Virginia$-$based discount$-$retail company. It

was easy but mind$-$bending to calculate the total throughput of DCs that priced everything at

exactly one dollar. With $$3\mathrm{.}2$ billion in revenue, the year $2004$ had been a busy one for the

company. Furthermore, in $2004,$ Dollar Tree Logistics had opened two new distribution centers:

a $660$ thousand square foot, manual facility in Ridgewood, Washington and a fully automated

operation with $1\mathrm{.}2$ million square feet in Joliet, Illinois.

White looked at the Logistics Mission Statement also hanging on his office wall and read

silently: "Logistics is committed to provide exceptional service to our stores through continual

improvements in operating costs, quality, and safety. By providing solid leadership, superior

execution of processes, acting with integrity, and demonstrating teamwork in all that we do$,$ our

mission will be accomplished through our most valued asset, our associate." Then he pondered

the new challenges that $2005$ would present to the logistics system that he and his colleagues had

designed, and how his team would continue fulfilling their mission. What do you recommend? DOLLAR TREE LOGISTICS

Cost Breakdown of the Logistics System

Note: Inbound cost includes ocean transportation cost and trucking cost on U$.$S$.$ land.

Source: Case writer estimate based on Dollar Tree Annual Report $2003$ and site interview.

a$.$ Expand or b$.$ Build new.

c$.$ Does your recommendation conflict with your quantification of the benefits for anyone?

$2.$ Based on the case study "Dollar Tree Logistics" What are the cost elements and drivers? $($What percent each, explain it$)$

a$.$ Inbound transportation

b$.$ DC facility cost

c$.$ Outbound transportation

d$.$ Inventory carrying cost.

Hint: Compute the DC cost$,$ using the scale and utilization calculations, and the outbound trucking cost for each option, for the first three years after expansion $(2005),$ then test the sensitivity of the cost to the forecast of sales growth. Don$$t consider the time value of money.