You have been hired as the Director of Transportation for Fat-E. Fat-E is three-year-old firm, founded by three university friends based out of Ottawa, Ontario. The company makes electrically powered bicycles made for off-road trail riding. The Fat-E is unique in that it is based on the "fat tire" bike already on the market. Fat-E's model includes an electric motor and with a heavy-duty transmission that automatically changes gears while moving. There are other bikes in this market, but the Fat-E is unique in that the transmission is electronically controlled, saving precious battery life power when in use. The firm has begun to build a relatively loyal customer base, and markets itself to offroad cycling enthusiasts, and off-road cycling clubs. Fat-E started originally by manufacturing their first models on their university campus in space provided by their entrepreneurial centre. The owners quickly outgrew this space and moved into a small industrial unit just outside Ottawa (Kanata). Since then, the company has grown to expand into the two adjacent units in the industrial complex. From this location they managed the entire business including 24 permanent full-time staff (mixed between administration, production, and warehousing). Business is strong and Fat-E has now outgrown the space they currently occupy and unfortunately there are no more adjacent units in the industrial complex for them to consider expanding into.The Bike: The bicycle is comprised of a heavy duty steel frame, weighing 48 pounds, two oversized rims with oversized "fat" tires, a battery that is integrated into the frame, and the patented transmission that has been integrated into the frame at the rear wheel. When fully assembled, the finished bike weighs 84 lbs. It is packaged and shipped with front wheel off and occupies a corrugated box: dimensions: 48 inches long x 12 inches wide x 30 inches high. The Fat-E is not palletized, and ships individually via courier. The bike contains a lithium-ion battery and due to dangerous goods regulations cannot be shipped by air. There are four primary components to the bicycle - the frame, battery, gears and wiring, and the wheels. Each is sourced from an individual supplier outside of Canada: The steel frame is manufactured in China and shipped via LCL. The battery is manufactured in Tennessee (USA) using LTL service paid for by the battery supplier. The gears and wiring are purchased in from a supplier in France using LCL service that is arranged by the seller. The final component, the wheels, are sourced from a supplier in Mexico City (Mexico). If Fat-E orders six or more pallets of wheels the supplier includes the cost of freight in the price of the wheels. If Fat-E orders less than six pallets the supplier arranges for LTL service but adds this expense on to the invoice to Fat-E.

Warehousing / Materials Handling The Operations Manager at Fat-E has been looking for a new warehouse space to either expand into or consolidate all of Fat-E's requirements into one building. They have expanded into the adjacent units at their current location however there are no other units available in the foreseeable future. The layout includes a production area (that is going to require more future space), a set of offices (that will also require more space as they grow), and the warehouse where raw materials and finished goods products are stored. The warehouse layout includes a traditional racking system that can store single pallets in three levels (on the ground, the first tier and then the second tier). The warehouse is setup with ten foot aisles to accommodate the use of forklifts loading and unloading the racking. The Operations Manager sees two possible alternatives - find one large warehouse that can accommodate all of the operations including production, warehousing and the office space. Or, alternatively, find a public warehouse that can take on the warehousing requirements and use the current space to expand production and the office space. You have been asked to make a preliminary report on the logistical impacts of the two options. As the Director of Logistics - you've been asked to focus your analysis to logistics (transportation, warehousing, etc.).Specifically, you have been asked to: 1. Describe the advantages and disadvantages of the two new warehousing options. 2. Discuss potential materials handling strategies for reducing the amount of space that the existing warehouse operation occupies within Fat-E's building.