Should Simone make all warehouses flexible given the additional cost of 200,000 euro per year?

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136 Chapter 5 Network Design in the Supply Chain TABLE 5-16 Zone Annual Demand in Europe for Lightning Networks (wireless) and SatTV (satellite) Wireless Satellite Wireless Satellite Demand Demand Zone Demand Demand 200,000 120,000 Middle South 120,000 120,000 100,000 100,000 Northeast 150,000 110,000 220,000 100,000 Southeast 90,000 100,000 Northwest Southwest Middle North for the two companies across six regions in Europe was much annual demand it can handle. From Table 5-17, as shown in Table 5-16. observe that the Madrid warehouse can serve demand of Lightning had served its product needs from three up to 370,000 units. The variable cost of shipping one unit warehouses located in Madrid, Spain; Rotterdam, Nether- (either wireless or satellite) from each warehouse location lands; and Krakow, Poland. SatTV had served its product to each market is shown in Table 5-18. needs from three warehouses located in Toulouse, France; Munich, Germany; and Budapest, Hungary. Each facility inty The Network Options Th was specialized to handle either wireless or satellite prod- ucts because of the historical focus of the company it Simone had a short term and a long term decision to belonged to. The specialization, capacity, and annual make. In the short term, she had to decide whether to fixed cost for each facility were as shown in Table 5-17. make all the warehouses flexible or not. Making all The capacity of each warehouse is given in terms of how warehouses flexible required an investment equivalent TABLE 5-17 Warehouse Specialization, Capacities, and Fixed Costs Location Specialization Capacity Fixed Cost (euro/year) Madrid Wireless 370,000 600,000 Rotterdam Wireless 420,000 650,000 Krakow Wireless 310,000 520,000 Toulouse Satellite 280,000 475,000 Munich Satellite 290,000 488,000 Budapest Satellite 250,000 425,000 TABLE 5-18 Variable Distribution Cost per Unit in Euro 2 2 Madrid Rotterdam Krakow Toulouse Munich Budapest Northwest 2.50 1.75 3.25 2.00 2.25 3.50 Southwest 1.50 3.00 4.00 2.00 3.00 3.75 Middle North 3. 00 1.50 2.50 2.75 2.25 2.50 Middle South .75 3. 00 3.00 2.50 2.50 2.50 Northeast 4.00 .50 2.00 3.75 2.75 2.50 Southeast 4.50 3.50 2.50 4.00 3.00 2.00