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Should the new los angeles distribution centre be added

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Reference no: EM132164907

SPECI FI C QUESTIONS TO ADDRESS IN YOUR ANALYSIS

1. Relative to the U.S. distribution network, calculate the costs associated with running the existing system. Assume that 40 percent of the volume arrives in Seattle and 60 percent in Los Angeles and the federal port processing fee at both locations is $5.00 per CBM.

Assume that everything is transferred to the Kansas City distribution centre by rail, where it is unloaded and quality checked. Assume that all volume is then transferred by truck to the nine existing warehouses in the United States.

2. Consider the idea of upgrading the Los Angeles warehouse to include a distribution centre capable of processing all the volume coming into the United States.

Assume that the original containers coming into Seattle would be shipped by rail to Los Angeles. All volume would be unloaded and quality checked in Los Angeles. Eighteen percent of the volume would then be kept in Los Angeles for distribution through that warehouse and the rest shipped by rail to the Kansas City warehouse.

The cost to ship to Kansas City would be $0.0018 per CBM. The material sent to Kansas City would not need to go through the "unload and quality check process," and would be stored directly in the Kansas City distribution centre. Assume that the remaining volume would be transferred by truck to the eight remaining warehouses in the United States at a cost of $0.0220 per CBM.

3. What should be done based on your analysis of the U.S. distribution system? Should the new Los Angeles distribution centre be added? Is there any obvious change that Grainger might do to make this option more attractive?

4. Is this strategically something that Grainger should do? What have they not considered that may be important?

Attachment:- Case Study - Grainger Distribution Centre Location.rar

Reference no: EM132164907

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