Let's also think about operations in the new Staging Facility. Describe some

characteristics of how we would operate this facility, including:

a$)$ Who should own and operate the facility $(98$ or a $3^{rd}$ party$)$

b$)$ Should the facility be a large storage facility, or more like a cross dock? Explain your

answer.

c$)$ Briefly describe some thoughts about how you would store product in the facility

and pick it to fill customer orders$\mathrm{.}98$ began delivery operations from the new Staging Facility using many rental vans. Every time a

shipment had to go out to a customer they had to pay for a separate van to deliver it$.$ Every time

a retailer had a case of empties to pick up they to pay for a separate van to pick it up$.$ The SCM

$309$ class told them this was crazy, they were taking way too much time and wasting way too

much money by not figuring out how to manage transportation more productively. They brought

up the notion of "consolidating shipments" onto less transportation assets. Lance mentioned

that he could buy a couple of old vans from one of his old buddies from Morrisville who ran the

local Chevy dealership.

Using the shipping data below that shows both outbound shipments of cans as well as inbound

movements of empty cans, identify ONE example of each of the consolidation opportunities in

questions $7-9.$ In each case, also identify the order$($s$)$ in which you would make each delivery

or pick up$.$

Multi$-$drop off of finished goods

Multi$-$pick up of empty cans

Outbound finished goods $+$ inbound empty can shipment consolidation

NOTE $1$: the van can hold up to $80$ cases in one load

NOTE $2$: make sure that you route the van so that you can unload in the correct order $-$ if you

route incorrectly you will have to offload a whole lot of cases to get to the order you need, so

you will have to load according to the order of stops on the route. And you don't want the

van to drive back and forth around the county, so make sure you route in a way that takes a

nice roundtrip through the market area.Cost per Delivery

Estimated Demand

What is the estimated cost of the minimum cost logistics network?

How many deliveries would you make from the brewery to the downtown area in this

network?

How many deliveries would you make from the staging facility to the downtown area in

this network?

How much would the cost to deliver a product from the staging facility to downtown

need to increase before your optimal solution would change?

How much would adding $1$ case of storage capacity at the brewery decrease cost?

What retail area is the least expensive to serve in the optimal network?IN CLASS EXERCISE # $-$ LOGISTICS MANAGEMENT

Lance and Ted, with the help of the SCM $309$ class, have achieved unparalleled success with

"Feels Like $98."$ Dramatically improved planning has enabled sales increases resulting from

reduced out of stocks and far less waste in ordering raw materials, cutting COGS and operating

expenses. In addition, the enhanced inventory management processes have reduced both

supplier average lead times and variation and enabled streamlined operations to meet demand

more quickly, thus requiring far less investment in both raw materials and finished goods

inventory and higher inventory turns.

These supply chain improvements have 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, Ted and Lance are evaluating renting out space as a

forward staging facility to deliver product to retail customers. If they did this then they 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. They are evaluating a facility in West

Knoxville on Middlebrook Pike. They have also broken their retail customers down into five

areas: Downtown, Bearden, Far West $($Farragut and Hardin Valley$),$ 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 estimated number of deliveries to each

retail area was also estimated. The following will also be required in the distribution network:

Customer demand 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

from the brewing facility directly to retail locations to $7,000$ cases

Use the d