Beer Case

1) The current shipment plan includes the following restrictions due to established relationships between brewery-distributor pairs: Ankara brewery supplies all the beer demand of the Bursa distributor and Istanbul brewery supplies all the beer demand of the Antalya distributor. The current plan has distribution shipment costs of $11.244 million projected. By minimizing cost network flow problems in the current plan with the constraints mentioned still emplace, we would reduce the total cost of distribution to $11.14432 million for a total savings of $0.09968 million. This is a significant decrease and would warrant changing the distribution plans.

2) If the current shipping limitations were relaxed, the distribution cost could be reduced from $11.14432 million to $9.90512 million. Therefore, to reach most efficient results in shipping and distribution costs, the company should relax the distribution limitations (Ankara brewery supplies all the beer demand of the Bursa distributor and Istanbul brewery supplies all the beer demand of the Antalya distributor).

3) Taking into consideration the costs imposed by the current distribution limitations, changing the shipping and distribution system for the company is justified by the cost savings. In more detail, according to our findings, cost reduction of $11.14432 – $9.90512 million = $1.23932 million will justify removing current limitations and implement an entirely new shipping and distribution system for the company.

4) According to the findings in the sensitivity report, the research has identified parameters which, if changed will increase cost efficiency for malt imports. Specifically, the sensitivity report shows that malt import to Istanbul can be reduced resulting in $.003636 million in cost savings. In addition malt import to Ankara can be reduced by $.01445 million.

We also determined transportation costs could be cut as follows (listed from the largest savings to the smallest): Istanbul to Kayseri...