This is a logistics/supply chain case study about moonchem. Please help me to answer the question inside this case study in details. Thank you.

CASE STUDY Delivery Strategy at MoonChem John Kresge, vice president of supply chain, was very con- ensure availability. In most instances, consumption of cerned as he left the meeting at MocnChem, a manufac- chemicals by customers was stable. MoonChem owned turer of specialty chemicals. The year-end meeting the consignment inventories and was paid for the chemi- evaluated financial performance and discussed the fact that cals as they were used. the firm was achieving only two inventory turns a year. A more careful look revealed that more than half the inven- Distribution at MoonChem tory MoonChem owned was in consignment with its cus- tomers . This was very surprising, given that only 20 percent MoonChem used Golden trucking, a full-truckload car- of its customers carried consignment inventory. John was rier , for all its shipments. Each truck had a capacity of responsible for inventory as well as transportation costs. He 40,000 pounds, Golden charged a fixed rate given the decided to take a careful look at the management of con origin and destination, regardless of the quantity shipped signment inventory and come up with an appropriate plan. on the truck. MoonChem sent full truckloads to cach customer to replenish its consignment inventory. MoonChem Operations The Illinois Pilot Study MoonChem, a manufacturer of specialty chemicals, had cight manufacturing plants and 40 distribution centers. John decided to take a careful look at his distribution The plants manufactured the base chemicals, and the operations. He focused on Illinois, which was supplied distribution centers mixed them to produce hundreds of from the Chicago distribution center. He broke up Illinois end products that fit customer specifications. In the spe into a collection of zip codes that were contiguous, as cialty chemicals market, MoonChem decided to differ- shown in Figure 11-9. He restricted attention to the Peoria entiate itself in the Midwest region by providing region, which was classified as zip code 615. A careful consignment inventory to its customers. The company study of the Peonia region revealed two large customers, wanted to take this strategy national if it proved effec- six medium-sized customers, and twelve small customers. tive. MoonChem kept the chemicals required by cach The annual consumption at cach type of customer was as customer in the Midwest region on consignment at the shown in Table 114. Golden charged $400 for each ship- customers' sites. Customers used the chemicals as ment from Chicago to Peoria, and MoonChem's policy needed, and MoonChem managed replenishment to was to send a full truckload to each customer as needed. PALATINE ROCKFORD 1600 1610 A 602 611[ (LA OFHCES) 527 528 ROCK ISLAND 612 FOX VALLEY 605 LA SALLE 613 601 A 603 CHICAGO 607 A606 SOUTH SUBURBAN 604 GALESBURG 1614 KANKAKEE 615 609 (MO FFICES) PEORIA 634 635 A616/BLOOMINGTON 1617 623 QUINCY SPRINGFIELD CHAMPAIGN 1625 1618 626 619 A 627 EFFINGHAM 1624 (NORTH) 620 ST. LOUIS, MO 631 (SOUTH) 622 628 CENTRALIA CARBONDALE 1629 FIGURE 11-9 Illinois Zip Code Map TABLE 11-4 Customer Profile for MoonChem in Peoria Region Consumption Customer Type Number of Customers (Pounds per Month) Small 12 1,000 Medium 6 6,000 Large 12.000 2 John checked with Golden to find out what it one large, three medium, and six small customers in cach would take to include shipments for multiple customers group. Each group would then be aggregated into a single on a single load. Golden informed him that it would truck going to Peoria . The detailed study of the Peoria charge $350 per truck and add $50 for each drop-off for region would provide the blueprint for the distribution which Golden was responsible. Thus, if Golden carried a strategy that MoonChem planned to roll out nationally. truck that had to make one delivery, the total charge would be 5400. However, if a truck had to make four Questions deliveries, the total charge would be $550. Each pound of chemical in consignment cost 1. What is the annual cost of MonChem's strategy of send- MoonChem SI, and MoonChem had a holding cost of ing full truckloads to each customer in the Peoria region to 25 percent. John wanted to analyze a few different options 2. Consider different delivery options and evaluate the cost replenish consignment inventory? for distribution available in the Peoria region to decide on of each. What delivery option do you recommend for the optimal distribution policy. One was to aggregate all MoonChem? 20 customers into each truck going to Peoria. The other 3. How does your recommendation impact consignment was to separate the 20 customers into two groups with inventory for MoonChem