Question
There are 100 factories sending their products to 5000 shops. A) If each transportation line needs $50k/year, factories need to spend $100k/year for warehousing, and
There are 100 factories sending their products to 5000 shops.
A) If each transportation line needs $50k/year, factories need to spend $100k/year for warehousing, and shops need to spend $20k/year for warehousing, what is the total cost of warehousing and logistics?
B) If factories send their products to 5 central warehouses and use them as Distribution Centers (DCs), then factories will be able to save $100k/year on warehousing and shops will be able to save $20k on warehousing. However, each DC needs $100M/year to run. If all of the DCs send products to all of the shops, how much will be the new cost of warehousing and logistics?
C) If we strategically place each DC in a geographical zone to serve only 1000 shops, then factories will be able to send their products to all of the DCs and each DC will send products to 1000 shops in their zone. Now how much is going to be the cost of supply chain operations and logistics?
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