4) Discussion Question 4 (30 points): KLF Electronics is an American Manufacturing of electronics equipment. The company has a single manufacturing facility in San Jose, CA. KLF Electronics distributes its products through five regional warehouses located in Atlanta, Boston, Chicago, Dallas, and Los Angeles. In the current distribution system, the U.S. is partitioned into five major markets. Each of these is served by a single regional warehouse. Customers, typically retail outlets, receive items directly from the regional warehouse in their market area. That is, in the current distribution system, each customer is assigned to a single market and receives deliveries from one regional warehouse. The warehouses receive items from the manufacturing facility. Typically, it takes two weeks to satisfy an order placed by any of the regional warehouses. In recent years, KLF has seen a significant increase in competition and huge pressure from their customers to improve service level and reduce costs. To improve service level and to reduce costs, KLF would like to consider an alternative distribution strategy in which the five regional warehouses are replaced with a single, central warehouse that will be in charge of all customer orders.

a) Provide the supply chain network design for KLF Electronics.

b) Provide an outline of an analysis you would perform in order to make decision where to locate the central warehouse. What are the main steps? Include brief description of each step?

c) What are the advantages and disadvantages of newly suggested distribution strategy relative to the existing distribution center strategy?

d) Assume KLF considering a second manufacturing facility, considering Site 1 and Site 2 in east coast. Formulate the mathematical modeling that will minimize total transportation cost and determines the new site leading to the best distribution pattern. Define your cost parameters and variables in your model.