Case Synopsis:

Your mission is to help A.B. Corp. select the location of a new central warehouse that will feed product to its five distribution centers. We will assume that the differences in freight rates between all locations are negligible.

Analysis Questions:

Q1: (1a) Compute the Center of Gravity location for the Central Warehouse based on the Load-Distance Method. (1b) Display the locations of the 5 distribution centers and the proposed location of the central warehouse on a graph.

Q2: (2a) Calculate the load-distance factors for all 5 CWH options on the basis of available data. (2b) Convert the load-distance values to be used as scores in the location-factor-rating method.

To convert the load distance values to scores, please use this method:

Destination X coordinate Y coordinate Load DC1 256 DC2 172 DC3 542 DC4 344 DC5 189 Total CW 261.04 433 378 233 454 267 363.02 Center of Gravity 2500 3000 1000 4500 5200 16200 L*X 640000 516000 542000 1548000 982800 4228800 X 261.037037 L*Y 1082500 1134000 233000 2043000 1388400 5880900 Y 363.018519 CW X coordinate Y coordinate Load distance Fraction 1-Fraction CW1 354 298 2788842.089 0.22322845 0.77677155 CW2 403 389 2962296.722 0.23711235 0.76288765 CW3 205 245 2506263.277 0.20060988 0.79939012 CW4 178 421 2301684.541 0.18423469 0.81576531 CW5 261.04 363.02 1934133.179 0.15481463 0.84518537 Total 12493219.81 CW1 DC X Y Load Distance LD DC1 256 433 2500 166.820263 417050.656 C2 172 378 3000 198.806439 596419.316 DC3 542 233 1000 198.919582 198919.582 DC4 344 454 4500 156.320184 703440.829 DC5 189 267 5200 167.886867 873011.707 Total 2788842.09 CW2 DC X Y Load Distance LD DC1 256 433 2500 153.443801 383609.502 DC2 172 378 3000 231.261756 693785.269 DC3 542 233 1000 208.942576 208942.576 DC4 344 454 4500 87.7838254 395027.214 DC5 189 267 5200 246.333108 1280932.16 Total 2962296.72 CW3 DC X Y Load Distance LD DC1 256 433 2500 194.794764 486986.909 DC2 172 378 3000 137.032843 411098.528 DC3 542 233 1000 337.213582 337213.582 DC4 344 454 4500 251.001992 1129508.96 DC5 189 267 5200 27.202941 141455.293 Total 2506263.28 CW4 DC X Y Load Distance LD DC1 256 433 2500 78.9176786 197294.197 DC2 172 378 3000 43.4165867 130249.76 DC3 542 233 1000 409.682804 409682.804DC4 DC5 Total CW5 DC DC1 DC2 DC3 DC4 DC5 Total 344 189 256 172 542 344 189 454 267 433 378 233 454 267 4500 169.248338 761617.522 5200 154.392357 802840.258 2500 3000 1000 4500 5200 Distance 70.1612571 90.2913174 309.586372 123.124823 120.040002 2301684.54 LD 175403.143 270873.952 309586.372 554061.703 624208.009 1934133.18 \fCW X coordinate Y coordinate LD Score Infrastructure Land Cost Tax Structure CW1 354 298 77.67 70 50 65 CW2 403 389 76.28 80 75 55 CW3 205 245 79.94 65 60 75 CW4 178 421 81.57 80 90 85 CW5 261.04 363.02 84.52 75 60 50 Weights 0.55 0.1 0.15 0.2 CWH1 70.2185 CWH2 72.204 CWH3 74.467 CWH4 83.3635 CWH5 72.986\fCW X coordinate Y coordinate LD Score Infrastructure Land Cost Tax Structure CW1 354 298 77.67 70 50 65 CW2 403 389 76.28 30 75 55 CW3 205 245 79.94 65 60 75 CW4 178 421 81.57 80 90 85 CW5 261.04 363.02 84.52 75 60 50 Weights 0.25 0.1 0.15 0.05 CW1 63.6675 CW2 63.97 CW3 65.885 CW4 79.7925 CW5 72.48\fFor the exclusive use of O. Saleh, 2025. Richard Ivey School of Business ly } F The University of Western Ontario W12947 LOCATION PLANNING AT A.B. CORP. Dr. Jitendra Sharma wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact lvey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright 2012, Richard Ivey School of Business Foundation Version: 2012-04-12 In March 2010, the management of A.B. Corp. announced its plan to select a definite location for its central warehouse (CWH). The company, a major producer of agriculture and farm equipment, had gone through three consecutive years of financial losses as a result of increasing production costs. COMPANY BACKGROUND A.B. Corp. was one of the leading producers of agriculture and farm equipment in the Vidarbha region of Maharashtra. A small-sized manufacturer and distributor of locally produced spare parts and components, it largely catered to the price-sensitive rural population. The company owned and operated one small- sized manufacturing unit in a relatively small city called Gondia in a remote district in Vidarbha, an impoverished region in the most progressive state (Maharashtra) of India. A.B. Corp. had an alliance partnership with Padgilwar Agro for the production of these agri-based tools and equipment. A.B. Corp.'s manufacturing units had been in operation since 1996. In fiscal year 2010/11, the company had annual sales of Rs3.6 million and employed more than 20 employees. Rather than compete with medium- or large-scale operations prevalent in the industry, A.B. Corp. preferred to focus on the rural segment. The company offered nearly 100 models of various appliances for farming, gardening, agriculture and allied activities. The broad range of products was aimed at the rural population as per A.B. Corp's policy of catering to the large population at the low end of the market segment in and around the district.' In the opinion of top-level management, there was more scope in this segment of market: they had been proven right, but this was about to change. ' The low end of the market referred to the customers who were price-sensitive. This document is authorized for use only by Omar Saleh in BUSI 7150 - Operational Excellence through Supply Chain and Quality Management (Summer 2025) taught by Rafay Ishfaq, Auburn University from May 2025 to Aug 2025. For the exclusive use of O. Saleh, 2025. Page 2 9B12D008 SELECTION OF CENTRAL WAREHOUSE The CWH would cater to five different distribution centres (DCs) (see Exhibit 1). In considering the location of the CWH the firm had a broad geographical area under its radar. There were several important factors to the location decision: load transferred, distance of the same from the five major distribution centres, surrounding infrastructure, land cost and regional and municipal tax structures. Although several sites offered more or less the same degree of incentives, the decision-makers were impressed with four potential sites that they suggested for further consideration (see Exhibit 2). An influential portion of the selection team insisted on adding one more site that it stated was central to all the DCs not only in terms of distance (straight line) but also with regard to load moved. The top management was of the view that in addition to these inducements and the usual load-distance criteria, all other critical factors under its consideration should be examined and properly weighed. The aforementioned priority factors were reached after due deliberation: this was achieved not only in terms of their priority weights but also as to how different potential locations of CWHs would 'score' on these factors on a scale of 100 (see Exhibit 3). A.B. Corp. knew that location was a long-term strategic decision (a 12 to 15 year commitment from management). Considering the numerous aspects of the decision, A.B. Corp. needed help to select the 'best site' for its CWH. This document is authorized for use only by Omar Saleh in BUSI 7150 - Operational Excellence through Supply Chain and Quality Management (Summer 2025) taught by Rafay Ishfaq, Auburn University from May 2025 to Aug 2025. For the exclusive use of O. Saleh, 2025. Page 3 9B12D008 Exhibit 1 CO-ORDINATES OF DISTRIBUTION CENTRES AND LOADS TO BE MOVED DC #1 DC #2 DC #3 DC #4 DC #5 X co-ordinate 256 172 542 344 189 Y co-ordinate 433 378 233 454 267 Load to be moved 2,500 3,000 1,000 4,500 5,200 Source: Created by author. Exhibit 2 CO-ORDINATES OF POTENTIAL CENTRAL WAREHOUSES CWH #1 CWH #2 CWH #3 CWH #4 CWH #5 X co-ordinate 354 403 205 178 Y co-ordinate 298 389 245 421 ? Source: Created by author. Exhibit 3 LOCATION FACTORS WITH PRIORITY WEIGHTS AND SCORES ON A SCALE OF 100 Location factors Weights Scores of potential central warehouses (out of 100) CWH #1 CWH #2 CWH #3 CWH #4 CWH #5 Infrastructure 0.1 70 80 65 80 75 Cost of land 0.15 50 75 60 90 60 Tax structure 0.2 65 55 75 85 50 Load distance factor 0.55 ? ? ? ? ? Note: In this case, score values for central locations are presumed. : Created by author. This document is authorized for use only by Omar Saleh in BUSI 7150 - Operational Excellence through Supply Chain and Quality Management (Summer 2025) taught by Rafay Ishfaq, Auburn University from May 2025 to Aug 2025.What if you are given a list of locations to evaluate on Load-Distance? Calculation of L-D Total for Site Alternative 1 Destination X coord Y coord Load Distance L*D A 1 3 55 4.47 246.0 B 5 20 5.00 100.0 First, calculate L*D scores for 7 8 15 3.61 54.1 each option. D 3 2 90 3.61 324.5 E 4 5 35 1.00 35.0 Total 759.6 Site Alternative L*D Total Fraction 1-Fraction Score Then, divide L*D totals for each 1 759.6 0.315 0.685 68.5 by the total for all to get the N 501.2 0.208 0.792 79.2 fraction. Subtract the fraction 3 917.8 0.381 0.619 61.9 from 1.0, and multiply by 100 to 4 231.0 0.096 0.904 90.4 get individual relative scores for Total 2409.6 1.000 each site alternative. P Pearson Copyright @ 2022, 2019, 2016 Pearson Education, Inc. All Rights Reserved