this is a Locations Analysis Question.

it is complete.

use the information provided to find the best suitable location using the centre-of-gravity technique.

The SA Widget Company (SAWC) manufactures a line of widgets at their plant in Johannesburg. They operate a national distribution network and supply widgets from four distribution centres (DCs) to various retailers in South Africa from. The widget product structure is as follows: Widget A(1) B(1) C(2) D(1) The components are supplied by various suppliers in South Africa and the respective number of components for each widget is indicated in brackets in the product structure. As a result of the poor economic conditions, SAWC has initiated various cost saving projects. In addition, the increasing level of competitiveness in the widget market has led to higher levels of demand variability Management has identified logistics as an area for potential cost reductions. SAWC has implemented an inventory control system that is integrated with their enterprise resource planning (ERP) system. Information is shared nationally since the regional offices are linked with head office through the ERP system. However, the logistic manager has suggested that the implementation of suitable information technologies should be investigated to reduce costs and increase service levels in the competitive market. SAWC is also reviewing their current logistics network since they are using their own vehicle fleet for plant to DC, as well as DC to customer deliveries and it is believed that the network impacts negatively on transport costs and customer service levels. To this end the following plant (Johannesburg) and major DC map coordinates are available: X Manufacturing plant 6.5 Johannesburg DC 7.0 Durban DC 9.0 Cape Town DC 1.5 Port Elizabeth DC 6.0 Each map coordinate = 180 km Y 4.0 6.5 4.0 1.0 1.2 w File Edit View Go Tools Window Help LMS2383 MAIN.pdf.pdf (page 4 of 4) a Sec QUESTION 4 (40 MARKS) 4.1 SAWC has analysed their current plant to DC transport cost and believes that the plant location has a negative impact on the transport costs. To this end management has identified an alternative plant location as shown below. x Y New plant location 6 2 The volumes transported from the plant to the DCs are as follows: Distribution centre Number of widgets Johannesburg DC 350 Durban DC 250 Cape Town DC 250 Port Elizabeth DC 150 Does the new plant location reduce the DC supply costs at the following transport rates? (The DC supply cost associated with the existing location is R1 963 341). Route Plant - Johannesburg DC Plant - Durban DC Plant - Cape Town DC Plant - Port Elizabeth DC Transport rate (Rand/widget/km) 1.90 2.50 4.15 3.75 Use the centre-of-gravity method to establish which of the two locations has the lowest transport cost associated with it. (18) The SA Widget Company (SAWC) manufactures a line of widgets at their plant in Johannesburg. They operate a national distribution network and supply widgets from four distribution centres (DCs) to various retailers in South Africa from. The widget product structure is as follows: Widget A(1) B(1) C(2) D(1) The components are supplied by various suppliers in South Africa and the respective number of components for each widget is indicated in brackets in the product structure. As a result of the poor economic conditions, SAWC has initiated various cost saving projects. In addition, the increasing level of competitiveness in the widget market has led to higher levels of demand variability Management has identified logistics as an area for potential cost reductions. SAWC has implemented an inventory control system that is integrated with their enterprise resource planning (ERP) system. Information is shared nationally since the regional offices are linked with head office through the ERP system. However, the logistic manager has suggested that the implementation of suitable information technologies should be investigated to reduce costs and increase service levels in the competitive market. SAWC is also reviewing their current logistics network since they are using their own vehicle fleet for plant to DC, as well as DC to customer deliveries and it is believed that the network impacts negatively on transport costs and customer service levels. To this end the following plant (Johannesburg) and major DC map coordinates are available: X Manufacturing plant 6.5 Johannesburg DC 7.0 Durban DC 9.0 Cape Town DC 1.5 Port Elizabeth DC 6.0 Each map coordinate = 180 km Y 4.0 6.5 4.0 1.0 1.2 w File Edit View Go Tools Window Help LMS2383 MAIN.pdf.pdf (page 4 of 4) a Sec QUESTION 4 (40 MARKS) 4.1 SAWC has analysed their current plant to DC transport cost and believes that the plant location has a negative impact on the transport costs. To this end management has identified an alternative plant location as shown below. x Y New plant location 6 2 The volumes transported from the plant to the DCs are as follows: Distribution centre Number of widgets Johannesburg DC 350 Durban DC 250 Cape Town DC 250 Port Elizabeth DC 150 Does the new plant location reduce the DC supply costs at the following transport rates? (The DC supply cost associated with the existing location is R1 963 341). Route Plant - Johannesburg DC Plant - Durban DC Plant - Cape Town DC Plant - Port Elizabeth DC Transport rate (Rand/widget/km) 1.90 2.50 4.15 3.75 Use the centre-of-gravity method to establish which of the two locations has the lowest transport cost associated with it. (18)