Your first job as the Logistics analyst supports the new VP of Supply Chain Logistics at CheckSum Electronics. Your objectives in the first $180$ days include developing a strategy to rationalize the logistics and supply chain network and identify savings opportunities for the corporation that can be implemented over the next $24$ months.

Over the years due to the growth in e$-$commerce and competition, the pattern of orders has changed, and the new shipment pattern is shown below, with $50\%$ of the load being next day delivery service.

Area

New York, NY Atlanta, GA

San Francisco Houston, TX area Chicago, IL

New daily tons $65000112000900006900075000$

Old daily tons $230006500010500045000105000$

Warehouse footprint and logistics:

The current warehouse footprint of the company includes $10$ locations across the country. With $80\%$ of the shipment being air freight from all the locations except Lebanon, KS which is $100\%$ truck shipments. The company has access to third$-$party logistics providers $(3$PL$)$ that have the ability to provide air freight and truck shipments from each of the locations. In addition to transport costs there are additional costs

$$ All material moving through the warehouse incurs handling costs shown on the table.

$$ Average inventory held at the warehouse is $50\%$ of the amount transported through the

warehouse, and holding costs are $$1/$ton$.$

$$ Unused warehouse space $($i$.$e the warehouse capacity not used when there isn$$t material

moving through the warehouse$)$ costs $$0\mathrm{.}25/$ton$.$

Within your budget, you have the ability to expand one warehouse to a maximum capacity of $100,000$ tons at a cost of $$5/$ton$.$

Next day delivery via truck is only possible where the warehouse location from customers is $24$ hours or less. Whereas, next day delivery by air is possible to all locations within the continental US$.$ Trucking routes only exist where the distance between the locations can be covered in $24$ hours or less $($Assume average truck speed is $55$ mph$).$ The company is not interested in evaluating rail transportation and intermodal at the present time.

Your report to the VP of Supply Chain Logistics should at minimum include a discussion of the following:

$1.$ Your recommendation of the $24-$hour delivery network. Network matrix diagram$($s$),$ cost $($$$/$ton$)$ along links $($without warehouse expansion$),$ mode of transport.

$2.$ What is the optimal number of warehouses needed to meet all the $24-$hour delivery demand and what is the cost $($without expansion$)?$

$3.$ What is the optimal number of warehouses needed to meet the total demand and what is the total cost $($without expansion$)?$

$4.$ Are there any constrained warehouses when trying to meet the total demand $($i$.$e at maximum capacity$)$ which are they?

$5.$ Do you recommend that they expand any warehouses? Which one and why? What other opportunities might exist?

$6.$ What non$-$financial considerations need to be taken into account?

$7.$ Are there any savings to be realized from inventory pooling? Provide your estimate of savings

from inventory pooling if any exist.