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. Customer location New York, NY Atlanta, GA San Francisco Houston, TX area Chicago, IL Warehouse footprint and logistics: The current warehouse footprint of the company includes 10 locations across the country. Currently, 80% of the shipment are air freight from all the locations except Lebanon, KS which is 100% truck shipments. The company has access to third-party logistics providers (3PL) 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 New Annual tons 65000 112000 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 $0.25/ton. 90000 69000 75000 Truck Rail Air Water Old Annual tons 23000 65000 105000 45000 105000 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. This is a one-time expansion cost. $ 0.37 $ 0.03 Next day delivery via truck is only possible where the warehouse location from customers is 24 hours or less (Assume average truck speed is 55 mph). Whereas, next day delivery by air is possible to all locations within the continental US. The company is not interested in evaluating rail transportation and intermodal at the present time. The costs per ton-mile are as follows $4.63 $0.1

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. Warehouse footprint and logistics: The current warehouse footprint of the company includes 10 locations across the country. Currently, 80% of the shipment are air freight from all the locations except Lebanon, KS which is 100% truck shipments. The company has access to third-party logistics providers (3PL) 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 (L.e the warehouse capacity not used when there isn't material moving through the warehouse) costs $0.25/ 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. This is a one- time expansion cost. Next day delivery via truck is only possible where the warehouse location from customers is 24 hours or less (Assume average truck speed is 55mph ). Whereas, next day delivery by air is possible to all locations within the continental US. The company is not interested in evaluating rail transportation and intermodal at the present time. The costs per ton-mile are as follows 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 they should have. a. Network matrix diagram(s) with relevant information b. cost (\$/ton) along links (without warehouse expansion), c. mode of transport along the link. 2. What is the optimal number of warehouses needed to meet all the 24 -hour delivery demand? What is the total cost (without expansion) of providing the 24hr delivery service? 3. What is the optimal number of warehouses needed to meet the total demand? What is the total cost (without expansion) of servicing the total demand? 4. Are there any constrained warehouses when trying to meet the total demand (Any warehouse operating at maximum capacity is considered constrained)? Which are they? 5. Do you recommend that they expand any warehouses? Which one and why? What other alternatives might exist? 6. What non-financial aspects of the logistics network you are proposing should be taken into consideration? 7. Are there any savings to be realized as a result of the recommendation? If so, what is your best estimate of those savings