Question: A distributor has six distribution centres (DCs) in a state. Each DC receives supplies of eight products from eight different supply sources. Trucks have a
A distributor has six distribution centres (DCs) in a state. Each DC receives supplies of eight products from eight different supply sources. Trucks have a capacity of 42,000 units and the transportation costs for one trip is /5,000. In addition, it costs 78,000 for making each delivery. The cost of holding one unit in inventory at a DC is 850 for a year. The logistics manager is considering whether to use direct shipping from suppliers to DEs or setting up milk runs from suppliers to DEs In a milk run a truck makes delivery to three distribution centres. a. What network do you recommend if the annual requirement for each product at each DC is 840,000 units? b. What network do you recommend if the requirement for each product at each DC is 126,000 units? c. What other factors would you consider for making the decision regarding transportation network?
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