Creamery

Case Study: Overview

Christine's Creamery and Confectionary, Inc. is a small but quickly growing national chain of specialty dessert retail stores, serving a rapidly expanding customer base with baked goods and dairy-based products. With locations scattered across only a limited number of cities, the company is poised to take advantage of a careful network design analysis as they aggressively pursue new markets. Current store locations can be found in the Boston, Philadelphia, Cincinnati, Charlotte, Montgomery, and Minneapolismetro regions. New stores are slated to open shortly across the west, in Omaha, Denver, San Antonio,and San Francisco. Finished goods warehouses that send products to the retail stores are currently located in Jersey City, Atlanta, and Chicago. New warehouses designed to support the westward expansion have been proposed for Dallas and Los Angeles. While most of the finished goods are produced at an Atlanta location, Dallas is also being considered as a potential site for the western region production source.

While the network analysis in this situation is fundamentally driven by the need for an evaluation of the potential warehouse and production locations, management is also interested in other related issues and questions. First, due to the nature of the products, re-supply times from the warehouses to the retail stores must be kept low to guarantee freshness, and management is interested in the effects that service time constraints have on the best network design and cost. Next, although everyone is interested in what a clean-slate, "Greenfield" approach produces, two locations must remain in the final network: the Atlanta Warehouse where the corporate headquarters is co-located, and Chicago Warehouse, where labor agreements discourage a reduction in operations for a period of another five years. For obvious reasons, management wants to be able to quantify the effects these constraints have on the costs of the selected network as well.

Along with the assistance of the IT department, you and other members of the project team have collected, scrubbed, and reformatted the requisite data for the network study. A year's worth of store location forecasted demands have been aggregated by metro area, all freight needs have been worked up that reflect the current and projected transportation lanes (existing and potential) in question, and facility costs have been broken into fixed and variable portions for existing and candidate locations.

The current network structure is shown below: