Question: 2. [10 pts] A 3rd Party Logistics Provider (3PL) needs to deliver auto parts from a common Pickup Location (P) to its 5 different customers

2. [10 pts] A 3rd Party Logistics Provider (3PL)

2. [10 pts] A 3rd Party Logistics Provider (3PL) needs to deliver auto parts from a common Pickup Location (P) to its 5 different customers (C1-C5) on a daily basis shown in the following figure. This 3PL company wants to improve customer service in case of customer demand changes and hence is trying to use a hub facility (H) which is halfway in between Pickup Location and Customer Locations. Due to current economic conditions, it focuses on an option which has the lower cost of transportation. Should this company use the hub facility? Why or why not? Following data is given for your information; Total demand of auto parts for 5 customers = 2.5TL delivery Average distance between pickup location and customers = 1400 miles > Average distance from pickup location to hub = 800 miles Average distance from hub to customers = 600 miles Cost for transportation = $250 handling +S0.95 mile > Cost for using hub = $300/day C1 C2 Pickup Location # C3 C4 Hub C5

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