Case Study: Develop a Supply Chain Network and Its Distribution Plans

In this case study, you are asked to analyze the network design and distribution decisions of a company

introducing its product in a new metropolitan area. Particularly, Company ABC has recently decided to

enter the market in area XYZ to sell its product, which is a daily used non$-$perishable product.

ABC wants to decide on its distribution network for the product in area XYZ$.$ Prior to entering any

market, ABC prepares a market analysis to estimate the demand for its product. The following steps are

executed to complete the market analysis for area XYZ:

$$ Area XYZ has been divided into $30$ representative districts

$$ A sample size representative of each district$$s population has been determined

$$ In each district, a number of households, equal to the sample size, has been surveyed

In the survey, ABC prepared questions to estimate the current demand for similar products and the

demand for its product. Therefore, one of the main questions in the survey was whether similar products

are consumed by the household and, if so$,$ what is the daily usage level. The other important question in

the survey was whether the person consuming similar products would switch to ABC$$s product. As a

result of these surveys, ABC has gathered the following data for each district:

$$ Daily usage of similar products in each district

$$ Percentage of households, who are using similar products, who answered $$definitely yes$,$yes$,$

and $$maybe$$ to the question whether they would use ABC$$s product instead of their current brand

The results of the survey are given in the case data $($Market Survey Results tab$).$ After market analysis,

ABC estimates the daily demand for each district.

In other cities, where the product is being sold, the distribution processes are operated as follows:

$$ The product is manufactured in production facilities located around the city. ABC determines

where the production facilities are located.

$$ Retailer stores are located around the centers of the thirty defined districts. ABC determines in

which districts retailer stores should be opened.

$$ Retailer stores are supplied from production facilities located around the city. ABC determines

which open retailer stores are supplied from which production facilities.

$$ Retailer stores are standardized, i$.$e$.,$ they have the same capacities. To remain profitable, an open

retailer store should at least have a pre$-$specified number of daily sales. For operating a store,

there are two parts of cost each week, fixed weekly operating cost that is the same for any district

$($e$.$g$.,$ labor cost$)$ and additional weekly cost that is different among districts $($e$.$g$.,$ rental$).$ The

total operating costs of having of a store in a district is the sum of the two if there is a store in the

district.

$$ The product is delivered to the customers from retailer stores.

$$ Retailers are responsible for a set of districts, and they deliver to the customers at their assigned

districts. ABC determines the districts assigned to open retailer stores.

$$ Production facilities use trucks to deliver the product to the retailers. Retailers use minivans to

deliver the product to the customers.

To supply the customers in area XYZ$,$ ABC is considering locating production facilities around area

XYZ$.$ There are five alternative sites to locate production facilities. These alternative sites are in sub$-$

urban areas around area XYZ$.$ The specifications of a possible production facility in each alternative site

are given in the case data $($Alternative Production Sites tab$).$ The geographic locations of the potential

production sites and retailers are given in the Geographic Locations tab.

The production facilities and the retailers deliver the product on a daily basis. Given the locations of the

production facilities and the retailer stores, ABC determines the quantity each retailer will receive

delivery from the production facility supplying it$.$ The shipments between the retailer stores and

production facilities are delivered with trucks owned by ABC. ABC has a single type of truck such that

one truck can carry $750$ units and costs $$3$ per mile traveled on average while the minivan can carry $100$

units and costs $$1$ per mile traveled on average. The distances between the districts can be calculated by

using the geographic locations. You may use any tools, software, or packages to do that. Transportation

costs within the same district are considered negligible.

To establish its supply network and distribution plans in city XYZ$,$ ABC needs to determine the

locations of production facilities, locations of retailer stores, the production facilities each retailer store

will be supplied with, the districts each retailer store will cover, and the daily transportation between

production facilities, retailers, and customers.

In this case study, you are asked to help ABC to establish its supply network and distribution p