Case Study

Background:American International Automotive Industries (AIAI) manufactures auto and truck engine, transmission, and chassis parts for manufacturers and repair companies in the United States, South America, Canada, Mexico, Asia and Europe. The company transports to its foreign markets by container ships. The company wishes to expand its business & select site for new European warehouse/ distribution center. The site should be selected such that it has minimum distance from the cities where supply is to be done to seven major customers. Quantitative analysis:http://www.prenhall.com/divisions/bp/app/russellcd/PROTECT/CHAPTERS/CHAP09/HEAD06.HTMPlant sites (x, y)LoadDistribution center sites (x, y)

Vienna (300, 60)160Dresden (225, 225)

Leipzig (180, 225)100Lodz (420, 250)

Budapest (390, 50)180Hamburg (90, 340)

Prague (240, 160)210Gdansk (370, 360)

Krakow (400, 170)90Frankfurt (40, 160)

Munich (150, 60)120

Frankfurt (40, 160)50

Using the load-distance technique:Comparative chart analysis was used to identify the site of distribution that is placed optimally w.r.t the customer sites.The five potential sites were Dresden, Lodz, Hamburg, Gdansk, and Frankfurt. & customer locations were Vienna, Leipzig, Budapest, Prague, Krakow, Munich, and Frankfurt. The distances of all customer location from each distribution site were obtained using standard map of Europe. The data is represented in the form of cross table as shown below.SitesDistance in miles No. of containers to be shipped to the following places

time taken to reachViennaLeipzigBudapestPragueKrakowMunichFrankfurtTotal

Dresdonmiles3087442698.43252862881805.4

time5 hr 40 min1 hr 22 min7 hr 13 min2 hr5 hr 22 min4 hr 34 min4 hr 34 min

Lodzmiles3653854843391646316092977

time6 hr 48 min6 hr 14 min8 hr 18 min6 hr 56 min3 hr 26 min9 hr 51 min9 hr 31 min

Hamburgmiles6102467324045624833103347

time10 hr 13 min4 hr 4 min11 hr 48 min6 hr 56 min9 hr7 hr 39 min5 hr 5 min

Gdanskmiles5694566895453687026804009

time10 h 4 min7 hr 58 min11 hr 37 min9 hr 32 min6 hr 38 min11 hr 36 min11 hr 17 min

Frankfurtmiles44624360132160524402460

time7 hr 17 min3 hr 55 min9 hr 30 min5 hr 19 min9 hr 28 min4 hr-

This table suggest that Dresdon could be an ideal site from where customers location is nearby, Given that there is uniform supply to each customer location. . Graphical representation further gives clearer picture.However, since the supply is not uniformly distributed there will be different charges involved in shipping of the container site is assumed that shipping container costs Rs X/ mile & that this price is uniform throughout Europe.Hence it is not possible to identify the distribution site solely using Table -1.

Table _ 2 SitesPrice factor involved in shipping from the distribution site to

ViennaLeipzigBudapestPragueKrakowMunichFrankfurtTotal

Dresden4928074007668020664292503432014400231994

Lodz58400385008712071190147607572030450376140

Hamburg976002460013176084840505805796015500462840

Gdansk9104045600124020114450331208424034000526470

Frankfurt71360243001081806741054450292800354980

it indicates price factor involvedd in shipping containers to customer location from each distribution site. This takes care of supply being on uniform. This is obtained by multiplying each entry of table 1 by no of containers (specific to the customer location)We can use this table to conclude which distribution site involves minimum price factor. This conclusively suggest that company AIAI should open distribution site at dresdon Here we have made the assumption that shipping rates are directly dependent on no of containers.