Anita Bailey is the newly appointed traffic man- ager for Orion Foods, a packer of a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Anita Bailey is the newly appointed traffic man- ager for Orion Foods, a packer of a wide variety of fruits and vegetables sold throughout the United States. The first project given her by her boss, the director of operations, is to "clean up the distribution mess in the West." Compared with product distribution in other parts of the United States, the cost to distribute the product in the West Coast area is considered excessively high. Surely costs can be reduced, she thought. CURRENT DISTRIBUTION Orion packs throughout the United States its line of fruits and vegetables and even imports some of its product line from regions such as South America and Canada. In the western United States, as shown in Figure 1, Orion has established regional distribution centers at Fresno, California and Burns, Oregon. From these master warehouses, field, or local, ware- California; (2) Phoenix, Arizona; (3) Salt Lake City, Utah; (4) San Francisco, California; (5) Portland, Oregon; (6) Butte, Montana; and (7) Seattle, Washington. Currently, the Burns regional distribution center serves Portland, Seattle, and Butte field warehouses. The Fresno distribution center supplies the remaining field warehouses. The capacities for the regional dis- tribution centers are 50,000 cwt.¹ of inventory for Fresno and 15,000 cwt. of inventory for Burns. Each has a turnover ratio² of eight. The field warehouses have average annual through- put volumes as given in Table 1. Additional location data are given in Appendix A. Orion contracts with trucking companies to move its products between regional and field warehouses. Its contract reads that it will pay its carriers $1.30 per mile for truckload quantities that average 30,000 lb, the typical shipment size. Anita understands that her predecessor had left the choice of the specific routes to travel to the Figure 1 Road Network for Orion's West Coast Distribution Area with Approximate Distances in Miles Y-coordinates 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 Newport o Coos Bay $ 1 A Eureka Astoria Grants Pass Redding E 9 133 Sentu Obispo 2 SEATTLE Eupen 31 115 106 Klamath Falls 269 PORTLAND 102 E 6, SAN FRANCISCO OE 3 133 Sacramento Ellensburg Bend B B Valy O Fresno Bakersfeld 4 LOS ANGELESO Blogs Lakeview Bishop@ 136 Bend Winnemuca N San Diego Burs 175 245 56 Pendleton 317 Barstow 172 787 3 225 3 144 175 Las Vegas o 271 Needle Blyth Yuma Spokane Boise e Twin Fall Wells -21 2 O Ev 178 222 Missoula 164 178 284 William Y 161 Jay SALT LAKE CIT 225 239 237 O Cadar City 125 275 Grand Canyon Grand Canyon Nat'l Park) 216 PHOENIX Bytte 193 idaho Fells 33 Mt. Carmel Jet 150 2₂ 2 S Spanish Fork Safina Page Flagstaff Tueso 7 8 9 1011 12 13 14 X-coordinates Chapter 7 Transport Decisions 287 Copyrighted material Table 1 Current-Year Average Throughput Volumes for the Field Warehouses with Transportation Costs FIELD WAREHOUSE Los Angeles, CA Phoenix, AZ Salt Lake City, UT San Francisco, CA Portland, OR Butte, MT Seattle, WA Totals Fresno, CA Fresno, CA Fresno, CA Fresno, CA Burns, OR the roads to use. She does not know the routes that were currently being used by the carriers. The Burns regional warehouse is currently operating near its capacity limit. If it were to be expanded, additional space in minimal incre- ments of 10,000 cwt. of inventory could be acquired for $300,000 per increment. Anita had seen the growth projections for the region and was surprised at the expected increases. The marketing department had developed sales projections for five years from Table 2 Five-Year Projections of Warehouse Throughput Burns, OR Burns, OR QUESTIONS 1. Can Anita improve upon the current distri- bution operations? SERVED FROM 2. Is there any benefit to expanding the ware- house at Burns, OR? FIELD WAREHOUSE Los Angeles, CA Phoenix, AZ Salt Lake City, UT San Francisco, CA Portland, OR Butte, MT Seattle, WA Total ANNUAL THROUGHOUT VOLUME, CWT. 110,000 60,000 35,000 84,000 43,000 5,000 56,000 393,000 ANNUAL TRANSPORTATION COSTS, $ 104,485 163,280 131,871 66,612 54,470 15,846 115,710 652,274 now, as shown in Table 2. She had also heard. that top management has been considering the possibility of consolidating the Fresno and Burns warehouses into a single warehouse located at Reno, NV. Although this would result in a net one-time cost of $2,000,000,³ total inven- tory could be reduced as much as 40 percent through this consolidation. Inventory-carrying costs are estimated to be 35 percent per year before taxes, and the standard cost for 100 lb of average product mix is $60. 3. Is there any merit to consolidating the regional warehousing operation at Reno, NV? ANNUAL THROUGHPUT VOLUME, CWT. 132,000 84,000 56,000 105,000 57,000 15,000 79,000 528,000 Anita Bailey is the newly appointed traffic man- ager for Orion Foods, a packer of a wide variety of fruits and vegetables sold throughout the United States. The first project given her by her boss, the director of operations, is to "clean up the distribution mess in the West." Compared with product distribution in other parts of the United States, the cost to distribute the product in the West Coast area is considered excessively high. Surely costs can be reduced, she thought. CURRENT DISTRIBUTION Orion packs throughout the United States its line of fruits and vegetables and even imports some of its product line from regions such as South America and Canada. In the western United States, as shown in Figure 1, Orion has established regional distribution centers at Fresno, California and Burns, Oregon. From these master warehouses, field, or local, ware- California; (2) Phoenix, Arizona; (3) Salt Lake City, Utah; (4) San Francisco, California; (5) Portland, Oregon; (6) Butte, Montana; and (7) Seattle, Washington. Currently, the Burns regional distribution center serves Portland, Seattle, and Butte field warehouses. The Fresno distribution center supplies the remaining field warehouses. The capacities for the regional dis- tribution centers are 50,000 cwt.¹ of inventory for Fresno and 15,000 cwt. of inventory for Burns. Each has a turnover ratio² of eight. The field warehouses have average annual through- put volumes as given in Table 1. Additional location data are given in Appendix A. Orion contracts with trucking companies to move its products between regional and field warehouses. Its contract reads that it will pay its carriers $1.30 per mile for truckload quantities that average 30,000 lb, the typical shipment size. Anita understands that her predecessor had left the choice of the specific routes to travel to the Figure 1 Road Network for Orion's West Coast Distribution Area with Approximate Distances in Miles Y-coordinates 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 Newport o Coos Bay $ 1 A Eureka Astoria Grants Pass Redding E 9 133 Sentu Obispo 2 SEATTLE Eupen 31 115 106 Klamath Falls 269 PORTLAND 102 E 6, SAN FRANCISCO OE 3 133 Sacramento Ellensburg Bend B B Valy O Fresno Bakersfeld 4 LOS ANGELESO Blogs Lakeview Bishop@ 136 Bend Winnemuca N San Diego Burs 175 245 56 Pendleton 317 Barstow 172 787 3 225 3 144 175 Las Vegas o 271 Needle Blyth Yuma Spokane Boise e Twin Fall Wells -21 2 O Ev 178 222 Missoula 164 178 284 William Y 161 Jay SALT LAKE CIT 225 239 237 O Cadar City 125 275 Grand Canyon Grand Canyon Nat'l Park) 216 PHOENIX Bytte 193 idaho Fells 33 Mt. Carmel Jet 150 2₂ 2 S Spanish Fork Safina Page Flagstaff Tueso 7 8 9 1011 12 13 14 X-coordinates Chapter 7 Transport Decisions 287 Copyrighted material Table 1 Current-Year Average Throughput Volumes for the Field Warehouses with Transportation Costs FIELD WAREHOUSE Los Angeles, CA Phoenix, AZ Salt Lake City, UT San Francisco, CA Portland, OR Butte, MT Seattle, WA Totals Fresno, CA Fresno, CA Fresno, CA Fresno, CA Burns, OR the roads to use. She does not know the routes that were currently being used by the carriers. The Burns regional warehouse is currently operating near its capacity limit. If it were to be expanded, additional space in minimal incre- ments of 10,000 cwt. of inventory could be acquired for $300,000 per increment. Anita had seen the growth projections for the region and was surprised at the expected increases. The marketing department had developed sales projections for five years from Table 2 Five-Year Projections of Warehouse Throughput Burns, OR Burns, OR QUESTIONS 1. Can Anita improve upon the current distri- bution operations? SERVED FROM 2. Is there any benefit to expanding the ware- house at Burns, OR? FIELD WAREHOUSE Los Angeles, CA Phoenix, AZ Salt Lake City, UT San Francisco, CA Portland, OR Butte, MT Seattle, WA Total ANNUAL THROUGHOUT VOLUME, CWT. 110,000 60,000 35,000 84,000 43,000 5,000 56,000 393,000 ANNUAL TRANSPORTATION COSTS, $ 104,485 163,280 131,871 66,612 54,470 15,846 115,710 652,274 now, as shown in Table 2. She had also heard. that top management has been considering the possibility of consolidating the Fresno and Burns warehouses into a single warehouse located at Reno, NV. Although this would result in a net one-time cost of $2,000,000,³ total inven- tory could be reduced as much as 40 percent through this consolidation. Inventory-carrying costs are estimated to be 35 percent per year before taxes, and the standard cost for 100 lb of average product mix is $60. 3. Is there any merit to consolidating the regional warehousing operation at Reno, NV? ANNUAL THROUGHPUT VOLUME, CWT. 132,000 84,000 56,000 105,000 57,000 15,000 79,000 528,000
Expert Answer:
Answer rating: 100% (QA)
1 Maximize and optimise every square foot of space Consider making better use of the vertical space in your warehouse rather than increasing its footprint Instead of incurring expansion fees increasin... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
Posted Date:
Students also viewed these mechanical engineering questions
-
Anita Bailey is the newly appointed traffic man- California; (2) Phoenix, Arizona; (3) Salt Lake ager for Orion Foods, a packer of a wide variety City, Utah; (4) San Francisco, California; (5) of...
-
Lori is the newly appointed project manager for the Fultz Metal Works Company, a small $30 million tool-and-die manufacturer. To remain competitive, the company is launching a series of projects to...
-
Under target costing, costs can be reduced in a variety of ways including all of the following except a. simplifying the design. b. changing the sales level. c. eliminating waste. d. reducing the...
-
You are the manager of a fast food restaurant. Part of your job is to report to the boss at the end of the day which special is selling best. Use your vast knowledge of descriptive statistics and...
-
Polanyi states that market economies are a recent phenomenon. Discuss what type of economic system and coordination might be prevalent in the future.
-
Determine the minimum width of a 30ft long cantilever W14 steel I-beam that carries a uniform 300 lb/ft load without exceeding a maximum allowable bending stress of 30 ksi. Then, check that the...
-
Which conditions for the binomial distribution, if any, fail to hold in the following situations? (a) The number of persons having a cold at a family reunion attended by 30 persons. (b) Among 8...
-
Imperial Carpet has the following unadjusted trial balance as of March 31, 2012. The debit and credit totals are not equal as a result of the following errors:a. The balance of cash was understated...
-
A 250 MW coal-fired power plant has a heat rate of 9,300 BTUs. What is its 1st Law efficiency?
-
Consider the $2-per-month tax on Internet access in Problem 6-9. Suppose that in the market for Internet access services provided to households, the market price increases by $2 per month after the...
-
QUESTION 2 Use the scenario below to answer the question. On Isla de la Mula Salada, Barney's Bait Shop sells fish bait to fishermen visiting the island. There are tons of other bait shops on the...
-
A band estimated that when a random ticket holder is invited on stage, there is a 1 chance 7 that the person will be over 30 years old. The band also estimates that two-fifths of its fans of any...
-
Abby found a roll of fabric. The fabric is 36 inches wide and 23 feet 3 inches long. He needs to cut four 1-yard-wide sections from this roll. The length of those sections are 5 2/3 ft., 4 7/8 ft., 5...
-
The City Library has ordered a new computer system costing $158,000. The system will be delivered in 6 months, and the full amount will be due 30 days after delivery. How much should be deposited...
-
Suppose one refrigerator costs $214 and uses $14 of electricity per year, while another costs $750 and uses $6 of electricity per year. In how many years will they cost the same
-
A soil sample was taken using a cylindrical core. The soil and core weighed 230 g. The mass of the core sampler is 78 g, has a height of 5 cm, and a diameter of 5 cm. After oven-drying at 105...
-
What are your thoughts on the pros and cons of video conferencing in the professional setting? Consider both the impact on the organization and the individual, either the one being interviewed or...
-
Where are the olfactory sensory neurons, and why is that site poorly suited for their job?
-
Two styles of mens shoes are manufactured by the Comfort Fit Shoe Company: Designer and Regular. Designer style is made from leather, and Regular style uses synthetic materials. Three...
-
Norberto Garcia, general manager of the Argentinean subsidiary of Innovation Inc., is considering the purchase of new industrial equipment to improve efficiency at its Cordoba plant. The equipment...
-
Madeline Franks, the owner of a small gift and souvenir shop, expects cash sales of $14,000 for October, $16,300 for November, and $21,100 for December. In addition, she expects credit card sales of...
-
Tesco plc is one of the worlds largest food retailers. Fiscal year 2014 (the year ended February 28, 2015) was a rocky year for the retailer. The companys sales and margins had come under pressure as...
-
Exhibit P2 displays a selected set of financial ratios for the years 20152017 of three fashion retailers: USbased Gap, UK-based Next, and Japan-based Uniqlo (Fast Retailing). Using this set of...
-
In 2009, following the worldwide credit crisis, several US-based car manufacturers, such as Chrysler and General Motors, approached bankruptcy and needed to be bailed out by the US government and...
Study smarter with the SolutionInn App