IN CLASS CASE #$3-$ LOGISTICS MANAGEMENT

Lance, with the help of the SCM $309$ classes, has achieved unparalleled success with "Feels Like $98."$ Dramatically improved planning and inventory management has enabled sales increases resulting from reduced out of stocks and far less waste in ordering raw materials, cutting COGS and operating expenses. This improvement has led to a significant increase in cash flow $($greater revenues, lower costs $=$ higher profit margins; less profit spent on inventory to achieve higher sales$)$ that have been invested in growing markets and product lines, as well as a new canning line in the brewery. The canning operation plus business development efforts have enabled $98$ to begin selling canned beers to local grocery and convenience store chains in Knoxville city and Knox County.

To help reduce costs and improve service, the brewery is evaluating renting out space as a forward staging facility to deliver product to retail customers. If it did this, then it could distribute cases to a small number of customers from the current brewery and use the new facility to distribute the bulk of product to retail locations. The brewery is evaluating a facility in West Knoxville on Middlebrook Pike. It has also broken its retail customers down into five areas: Downtown, Bearden, Far West $($Farragut and Hardin Valley$),$ South Knoxville $($SoKno$),$ and Powell $($North Knox areas$).$ The estimated average cost per delivery from the brewery and staging location to customers along with associated capacities and the forecasted number of deliveries to each retail area was also estimated. The following will also be required in the distribution network:

Customer demand is based on a forecast that must be met but cannot be exceeded

Outgoing shipments from the brewery may not exceed its manufacturing capacity of $28,100$ cases per year

Outbound shipments from the staging facility must be equal to inbound shipments

Storage space at the brewery will limit the volume of cases that can be direct shipped