Logistics

PROC 5850 – Logistics Mid-Term

(Open Book)

1. KLF Electronics is an American manufacturer of electronic equipment. The company has a single manufacturing facility in San Jose California. (20 points)

KLF Electronics distributes its products through five regional warehouses located in Atlanta, Boston, Chicago, Dallas, and Los Angeles. In the current distribution system, the United States is partitioned into five major markets, each of which is served by a single regional warehouse. Customers, typically retail outlets, receive items directly from the regional warehouses in their market area. That is, in the current distribution system, each customer is assigned to a single market and receives deliveries from one regional warehouse.

The warehouses receive items from the manufacturing facility; typically, it takes about two weeks to satisfy an order placed by any of the regional warehouses. In recent years, KLF has seen a significant increase in competition and huge pressure from their customers to improve service levels and reduce costs. To improve service level and reduce costs, KLF would like to consider an alternative distribution strategy in which the five regional warehouses are replaced with a single, central warehouse that will be in charge of all customer orders.

Part A: Describe how you would design a new logistics network consisting of only a single warehouse.

First I would get higher management involved in this process. The decisions that you make not only effect the present, but affect the future as well for the company (3-5 years). I would include sales, marketing, manufacturing, and operations in the planning phase of this warehouse. Having all key personnel is essential for the process to work successfully. I would reconfigure the logistics network to minimize several costs which includes: purchasing, production, inventory holding, facility, and transportation cost. Using one...