Ethique thique ethique thique ethique ethique Ethique currently has one distribution centre in New Zealand (located in Christchurch), which serves customers across the country as well as in Australia. However, there is some concern that customer service levels are too low, as delivery times to customers are below the industry standards, particularly when considering the Australian customers. The customer service manager has suggested that more distribution centers would enable the firm to respond more quickly to customer orders. You know that increasing the number of warehouses will also increase the company's overall inventory levels. There are on average 37,000 units in inventory in the current DC, inventory is valued at $12 per unit and inventory carrying costs (ICC) are 15%. ethique To Do: a) Determine the changes in inventory levels and costs (inventory investment and ICC) when considering possible 2, 3, 4, and 5 DC solutions, showing incremental change with each additional DC added to the network. (Round inventory units UP to the nearest whole number, and work from there to calculate inventory costs and ICC.) [5 Marks] b) The yellow marker on the map represents the current DC in Christchurch, with green markers indicating a variety of possible locations for an expanded DC network. How would you advise Ethique managers on next steps towards expanding the distribution network, and why? What further information would you want to included to make a more definitive recommendation? Provide sufficient explanation and justification for your initial recommendation and request for additional information. [5 Marks] Ethique thique ethique thique ethique ethique Ethique currently has one distribution centre in New Zealand (located in Christchurch), which serves customers across the country as well as in Australia. However, there is some concern that customer service levels are too low, as delivery times to customers are below the industry standards, particularly when considering the Australian customers. The customer service manager has suggested that more distribution centers would enable the firm to respond more quickly to customer orders. You know that increasing the number of warehouses will also increase the company's overall inventory levels. There are on average 37,000 units in inventory in the current DC, inventory is valued at $12 per unit and inventory carrying costs (ICC) are 15%. ethique To Do: a) Determine the changes in inventory levels and costs (inventory investment and ICC) when considering possible 2, 3, 4, and 5 DC solutions, showing incremental change with each additional DC added to the network. (Round inventory units UP to the nearest whole number, and work from there to calculate inventory costs and ICC.) [5 Marks] b) The yellow marker on the map represents the current DC in Christchurch, with green markers indicating a variety of possible locations for an expanded DC network. How would you advise Ethique managers on next steps towards expanding the distribution network, and why? What further information would you want to included to make a more definitive recommendation? Provide sufficient explanation and justification for your initial recommendation and request for additional information. [5 Marks]
