Case Context

By 1983 (the case time context), the two-wheeler market had been liberalised and companies had to deal with the new realities. Logistics was one of the business activities which got a strong look. The case of Kamataka Engineering Company Limited (KEC) provides the background for analysing a key set of logistical concerns.

Strengthening the distribution network for finished products is one of the most direct ways of improving service effectiveness and cost efficiency of a firm's marketing related operations. The cost of setting up and operating different facilities in the distribution network have to be viewed vis--vis the recurring transportation and inventory costs in the distribution network and increasingly, service measures such as response time to different sets of downstream customers.

In this case, the logistics manager is faced with the issue of designing a distribution network Two-wheelers have to be distributed from a single factory to several dealers. For illustrating the nature of the decision, one state (Andhra Pradesh) is taken up for detailed analysis. Here, it is assumed that distribution will be done state-wise, because of commercial (tax) considerations.

Five hierarchical decisions have to be made in this case, deciding on the number of warehouses, the location of those warehouses, the allocation of demand points to a warehouse, the selection of a shipment size, and an order processing and routing policy for the actual distribution from warehouse to demand points. Here shipments from depots to dealers are through trucks or LCVs. Depending on the order processing discipline that is selected, one could have the possibility of meeting the demands of two or more dealers with a single trip. This would need a routing procedure

Andhra Pradesh KEC Branches Co-ordinated

Sl. No.	Name	X Co-ordinate	Y Co-ordinate	Moped off take	Transportation rate
1	Adoni	2.2	10	41	4.8
2	Chittoor	5	4	106	4.8
3	Nellore	6.5	7	44	4.8
4	Ongole	6.5	9.5	20	4.8
5	Chirala	7	10.5	54.8	4.8
6	Cuddappah	4.5	7.1	61.4	4.8
7	Hindupur	2.4	5.8	71.2	4.8
8	Anantapur	2.8	7.8	76	4.8
9	Kurnool	3.4	10.2	24.8	4.8
10	Tirupati	5.5	5	90.6	4.8
11	Guntur	7	11.8	119	4.8
12	Vijaywada	7.5	12.1	253	4.8
13	Khammam	6.9	14.1	104	4.8
14	Warangle	6.5	15.8	89	4.8
15	Rajamundry	9.1	13.3	80	4.8
26	Kakinada	9.9	13	76.4	4.8
17	Vizag	11.2	15.2	124.6	4.8
18	Vijayanagaram	11.5	16	38	4.8
19	Mehboobnagar	3.2	13.2	36	4.8
20	Hyderabad	4.2	14.5	728	4.8
21	Nizamabad	3.5	18	69	4.8
22	Karim Nagar	5.1	17.8	79	4.8

EXHIBIT B Andhra Pradesh-KEC Branches MAHARASHTRA ORISSA Nizamabad Karimnagar Warangal Vijayanagaram Vizag Hyderabad Khammam Kakinada Rajamundry Mehboobnagar Vijayawada AP Raichur Factory Guntur Kurnool Adon Ongole BAY OF BENGAL Anantapur Cuddappah Nellore Hindupur Tirupati KARNATAKA Chittoor BG MS TAMILNADU Pondy EXHIBIT B Andhra Pradesh-KEC Branches MAHARASHTRA ORISSA Nizamabad Karimnagar Warangal Vijayanagaram Vizag Hyderabad Khammam Kakinada Rajamundry Mehboobnagar Vijayawada AP Raichur Factory Guntur Kurnool Adon Ongole BAY OF BENGAL Anantapur Cuddappah Nellore Hindupur Tirupati KARNATAKA Chittoor BG MS TAMILNADU Pondy