Consider the following design proposals and financial performance measures for Mighty Manufacturing given in Table 5.39. Both sets of numbers are for 2017 with all possible markets open and plants open in both Denver and Covington. Scenario A has DCs in Denver, Chicago, Pittsburgh, and Atlanta. Scenario B has DCs in Denver,

Los Angeles, Portland, Dallas, Chicago, Boston, Pittsburgh, and Atlanta.

a. Which scenario offers better customer service? Why?

b. Which scenario would you suspect has higher transportation costs? Why?

c. Under which scenario is Mighty Manufacturing in a better position if forecasts for new markets are too high? Why?

d. Under which scenario is Mighty Manufacturing in a better position if forecasts for new markets are too low? Why?

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TABLE 5.39 Data for Mighty Manufacturing (Exercise 5.13) Total sales ($000) Return on assets Average time through supply chain (days) Order cycle time to customer (days) Achieved service level Average production capacity utilization Scenario A $76,537 62.03% 42.68 4.38 98.95% 89.22% Scenario B $75,092 57.93% 40.03 3.42 97.08% 82.47%