Case Study 4

Lorielys Linares

Case Study, #4 Questions 1-3

1. What impact would the three new alternatives have on transfer and customer freight costs? Why?

The three new alternatives would help minimize the costs of transfer and customer freight costs. By using information data collected from customers the company will be able to ensure timely inventory replenishment and focus production on actual numbers rather than forecasted numbers. This will eliminate any unnecessary production or over production which in turn will minimize distribution costs. By consolidating systems costs can also be minimized because there are fewer facilities to maintain.

2. What impact would warehouse consolidation have on inventory carrying costs, customer service levels and order fill rate?

Warehouse consolidation would reduce inventory carrying costs. This occurs because facility space will be utilized more efficiently which in turn will eliminate unnecessary work. Westminster currently operates three domestic consumer sales companies with several distribution centers under each. Company A and Company C have warehouses in Newark, NJ. This is a prime example of how the company can consolidate warehouses. Although there may be a change in the amount of production shipping from the warehouse, Getting rid of one of the facilities will still show a substantial growth in savings. Warehouse consolidation could mean longer wait times for customers. When there is a consolidation the warehouse is stuck with an inflow of orders that would normally be split between two centers. It is important that that the location has the ability to service a larger customer group. Order fill rates will be positively influence by warehouse consolidations because there is a frequency of orders which makes the products increasingly available to fill those orders. This means that the warehouse will always be readily stocked to fulfill customer requests.

3. How are warehousing costs affected...