Ngaio, the distribution manager at Hine, is responsible for shipping all orders from the company's 3 distribution centres. Given the rising cost of real estate, she is wondering whether she can effectively serve the nation's customers from a single distribution centre. By closing 2 DCs, she expects a change in inventory and inventory carrying costs, but does not know by how much. However, she estimates that transportation costs will increase by 20% since delivery routes will be longer. Longer delivery routes may also mean that the cost of lost sales increased if customers are dissatisfied with longer delivery times. She estimates a 5% increase in the cost of lost sales. Warehousing costs should decrease by 50% with the reduction in DCs. Ngai is also aware that customer service metrics may be impacted by the change in the distribution network. She has 3 primary service metrics in mind, with the current goal of 95% service level on each of them: Unit Fill Rate and Order Fulfilment Accuracy should both increase with better inventory control at a single DC, but On-time Delivery (measured as a % of orders processed) will most likely decrease due to the longer delivery routes. Answer the following 4 questions Current Inventory in 3 DCS 87,700 units Use no more than 2 decimal 1. Average Unit Value $80 Assess the change in inventory levels by moving to 1 DC from the points in your calculations. current 3 DC network. (4 Marks) Inventory Carrying Cost 12% Show final answers in whole numbers. Annual Transportation Costs $2,750,000 2. Conduct a Total Cost Analysis for annual expenditures and make a Annual Lost Sales $275,000 recommendation to Ngaio as to whether her plan is advisable or not. Show your workings on all Annual Warehouse expenses $3,250,000 Explain why. (6 Marks) quantitative questions! 3. Assess the change in customer service using a Perfect Order Index for Monthly Fulfilment Data Current Proposed Ngaio's 3 service metrics. Discuss the results of your analysis. (6 Marks) Customer Orders Processed 2,400 2,400 Units Ordered 7,800 7,800 4. This problem provides a practical example of strategic trade-offs to be Units Shipped 7,300 7,600 made in managing distribution networks. Discuss these trade-offs Correct Units Shipped 7.275 7,350 conceptually (4 Marks) Orders Delivered On-Time 2,300 2.200 Ngaio, the distribution manager at Hine, is responsible for shipping all orders from the company's 3 distribution centres. Given the rising cost of real estate, she is wondering whether she can effectively serve the nation's customers from a single distribution centre. By closing 2 DCs, she expects a change in inventory and inventory carrying costs, but does not know by how much. However, she estimates that transportation costs will increase by 20% since delivery routes will be longer. Longer delivery routes may also mean that the cost of lost sales increased if customers are dissatisfied with longer delivery times. She estimates a 5% increase in the cost of lost sales. Warehousing costs should decrease by 50% with the reduction in DCs. Ngai is also aware that customer service metrics may be impacted by the change in the distribution network. She has 3 primary service metrics in mind, with the current goal of 95% service level on each of them: Unit Fill Rate and Order Fulfilment Accuracy should both increase with better inventory control at a single DC, but On-time Delivery (measured as a % of orders processed) will most likely decrease due to the longer delivery routes. Answer the following 4 questions Current Inventory in 3 DCS 87,700 units Use no more than 2 decimal 1. Average Unit Value $80 Assess the change in inventory levels by moving to 1 DC from the points in your calculations. current 3 DC network. (4 Marks) Inventory Carrying Cost 12% Show final answers in whole numbers. Annual Transportation Costs $2,750,000 2. Conduct a Total Cost Analysis for annual expenditures and make a Annual Lost Sales $275,000 recommendation to Ngaio as to whether her plan is advisable or not. Show your workings on all Annual Warehouse expenses $3,250,000 Explain why. (6 Marks) quantitative questions! 3. Assess the change in customer service using a Perfect Order Index for Monthly Fulfilment Data Current Proposed Ngaio's 3 service metrics. Discuss the results of your analysis. (6 Marks) Customer Orders Processed 2,400 2,400 Units Ordered 7,800 7,800 4. This problem provides a practical example of strategic trade-offs to be Units Shipped 7,300 7,600 made in managing distribution networks. Discuss these trade-offs Correct Units Shipped 7.275 7,350 conceptually (4 Marks) Orders Delivered On-Time 2,300 2.200