Consolidated Bottling

Consolidated Bottling Incorporated has a solid distribution and manufacturing network throughout the United States. According to the case study, bottling plants exist in 12 cities and distribution centers are located in 18 cities. Consolidated Bottling’s management is tasked with building an additional plant that can lower overall shipping costs. The ideal location can satisfy local demand and thus, lower transport cost and/or could be strategically located near high demand locations that are currently served by expensive transportation routes. Consolidated bottling has decided to select one of the 6 cities, where currently distribution centers are established (Columbus, Indianapolis, Miami, Montreal, Raleigh or San Francisco) as its choice for a new bottling plant.

If a new plant is to be built in one of the six cities that serves as a distributorship but currently does not have a plant, which city should be chosen? How large should the plant be?

If a new plant is to be built in one of these six cities, based on the transportation estimates the management can suggest one of 2 top locations – Indianapolis or San Francisco. Both have relatively medium internal demand (when compared to Montreal which consumes 121,000 cases) but they appear to present the lowest transportation costs – 3262. A summary of all scenarios evaluated (all six plants as possible choices for the new plants at both 130,000 and 180,000 capacities) is enclosed below:

New Plant | Estimated Transport Cost -130 | Estimated Transport Cost - 180 |

Columbus | 3640 | 3490 |

Indianapolis | 3489 | 3289 |

Miami | 3788 | 3788 |

Montreal | 3625 | 3625 |

Raleigh | 3887 | 3837 |

San Francisco | 3489 | 3289 |

In both Indianapolis and San Francisco, building a larger capacity plant (180 when compared to 130) yields slightly better results in terms of transportation savings (0.006%). Running an analysis at 155,000 capacities for these two locations, Indianapolis and San Francisco,...