A paint production company established in the industrial zone produces various construction paints in different packaging sizes.

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Question:

A paint production company established in the industrial zone produces various construction paints in different packaging sizes. This company has four different legal entities (distribution centers) in one distribution region. 1,200 dealers located in 10 different sub-regions receive faxes after sending their orders to the distributors by phone. The distributor is responsible for the delivery of the ordered products to the dealers. Distributors also sell hot to dealers. Whenever a dealer places his order within the month, he makes his payment at the beginning of the following month. In contrast, distributors make payments to the manufacturing company with a 60-day maturity. As an example, information about the three dealers and four distributors are given in Table 1 and Table 2, respectively.

Each distributor has a warehouse that serves as a distribution center. The paints from the manufacturer are taken to these centers and loaded on the vehicles to be sent to the dealers according to the order status. Products for hot sale are also loaded on the vehicles that will go to the dealers. Loading and unloading works are carried out in bulk (without using pallets etc.) in the manufacturer company, distributors and dealers. It is not possible for the distributors to send the products with TIR, both distributors and dealers can receive the products between 08:00 and 18:00. The fact that a standard storage system has not been developed in distributor and dealer warehouses may lead to lengthy work and errors in order to prepare orders (product collection) in distributor warehouses. Each distributor tracks the purchase, sales, inventory and collection information through his personal computer and office programs. Dealers display samples of their products in their shops, and the rest in their small warehouses. Therefore, product storage capacities are limited. Approximately 80% of the orders placed to distributors come from 40-50% of the dealers in their regions. In urban distribution, certain roads may not be used at certain times and tonnage restrictions may be imposed. Distributors place their orders to the manufacturing company. The shipping responsibility belongs to the manufacturer. The sale of construction paints intensifies in the summer. End of season, expiration of shelf life, packaging defect, etc. For reasons, returns may be made from the dealer to the distributor, from the distributor to the manufacturer company.

The producer company can apply campaign sales during periods of excess product. The number of campaign sales periods is on average three times a year. Campaign sales can be of three types:

1) By applying discounts on sales prices,

2) In addition to some products, by giving small packaged free products,

3) In addition to products, brushes, t-shirts, hats, etc. giving promotional materials.

These sets are prepared in distributor warehouses. Some products are only available in some dealers, especially during campaign periods. The producer company may want to reduce its stocks by giving the products to the distributors for a short period of time in the period when the price will increase. Manufacturer company; It wants to increase logistics service quality, customer service level (availability), flexibility and delivery speed and reduce logistics costs on both distributor and dealer basis. In this context, define the problem, analyze it, develop solutions and suggestions.

Table 1. First 10 Months Data of 2019 for Sample Three Dealers / Table 2. First 10 Months Data of 2019 for Distributors Sales Amount (kg) Daily Average Orders (Number) Inventory Turnover (days) Number of Product Type (SKU) (Number) Number of ?zm