Cbddm

Table of Contents

Executive Summary 2

Background 3

Objective 3

Results Obtained 4

Recommendation 4

Rationale 5

Managerial Report 6

Appendix 11

Executive Summary

background

Darby Company manufactures and distributes meters used to measure electric power consumption. The company has production plants in El Paso, Texas and San Bernardino, California. The company also has three distribution centers in Fort Worth, Texas; Santa Fe, New Mexico; and Las Vegas, Nevada. The company has nine customer zones that its product is shipped to from the three distribution centers and they are; Dallas, San Antonio, Wichita, Kansas City, Denver, Salt Lake City, Phoenix, Los Angeles, and San Diego.

objective

Due to the rapid growth that Darby Company has experienced, the overall efficiency of our distribution system is being assessed to verify that Darby Company is maximizing its distribution resources.

Results obtained

Table 1

Master Summary Table |

  | Unit Cost | # Units | Version 1 | Version 2 | Version 3 |

TOTAL COST |   |   | $ 620,770 | $ 600,942 | $ 553,534 |

  |   |   |   |   |   |

Manufacturing Cost |   |   |   |   |   |

* Units ( El Paso) | $10.50 | | 28,220 | 21,260 | 21,260 |

* Units ( San Bernardino) | $10.00 |   | 13,040 | 20,000 | 20,000 |

Total Units |   |   | 41,260 | 41,260 | 41,260 |

TOTAL MANUFACTURING |   |   | $426,710 | $423,230 | $423,230 |

TOTAL TRANSPORTATION |   |   | $194,060 | $177,712 | $130,304 |

$/Units |   |   | $15 | $15 | $13 |

Version 3 costs $2 less per meter to ship than Version 1 or Version 2

Recommendation

After a thorough analysis of the Darby Company distribution system, Version 3 of the distribution methods analyzed is the distribution network that Darby Company should pursue to maximize its resources and minimize costs. We further recommend Darby not expand manufacturing operations until...