A local retail chain has four stores supplied from two regional warehouses located in Abu Dhabi (AD) and Ajman (AJ) Trucks have a capacity of 20,000 and cost AED 5000 per load plus AED 400 per delivery The cost of holding one unit in stock at the retail is AED 2 You were asked to determine whether to use direct shipping form regional warehouses to the four stores or setting up milk runs to two or four stores on each truck The annual sales for each product at each store are 200,000 units Assume that all trucks travel full What is the best distribution option Input data Truck capacity Cost per load Cost per delivery Demand at each store Holding cost Number of stores Number of warehouses Direct Shipping Batch size shipped from each supplier to each store Number of shipments yr from each warehouse to each store Annual trucking cost for direct network Average inventory at each store for each product Annual inventory cost for direct shipping Total annual cost of direct shipping Milk runs to two stores on each truck Batch size shipped from each supplier to each store Number of shipments yr from each warehouse to each store Transportation cost per shipment per store Annual trucking cost for milk run shipping Average inventory at each store for each product Annual inventory cost for direct shipping Total annual cost of direct shipping

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Question: A local retail chain has four stores supplied from two regional warehouses located in Abu-Dhabi (AD) and Ajman (AJ). Trucks have a capacity of 20,000

A local retail chain has four stores supplied from two regional warehouses located in Abu-Dhabi (AD) and Ajman (AJ). Trucks have a capacity of 20,000 and cost AED 5000 per load plus AED 400 per delivery. The cost of holding one unit in stock at the retail is AED 2. You were asked to determine whether to use direct shipping form regional warehouses to the four stores or setting up milk runs to two or four stores on each truck. The annual sales for each product at each store are 200,000 units. Assume that all trucks travel full. What is the best distribution option?

*Input data*
Truck capacity
Cost per load
Cost per delivery
Demand at each store
Holding cost
Number of stores
Number of warehouses
Direct Shipping
Batch size shipped from each supplier to each store
Number of shipments/yr from each warehouse to each store
Annual trucking cost for direct network
Average inventory at each store for each product
Annual inventory cost for direct shipping
Total annual cost of direct shipping

Milk runs to two stores on each truck
Batch size shipped from each supplier to each store
Number of shipments/yr from each warehouse to each store
Transportation cost per shipment per store
Annual trucking cost for milk run shipping
Average inventory at each store for each product
Annual inventory cost for direct shipping
Total annual cost of direct shipping

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