CASE STUDY

Background:
American International Automotive Industries (AIAI) manufactures auto and truck engine, transmission, and
chassis parts for manufacturers and repair companies in the United States, South America, Canada, Mexico,
Asia and Europe. The company transports to its foreign markets by container ships. The company wishes to
expand its business & select site for new European warehouse/ distribution center. The site should be selected
such that it has minimum distance from the cities where supply is to be done to seven major customers.
Quantitative analysis:

http://www.prenhall.com/divisions/bp/app/russellcd/PROT
ECT/CHAPTERS/CHAP09/HEAD06.HTM
Plant sites (x, y)
Vienna

Load
160

Distribution center sites (x, y)

(300, 60)

Dresden

(225, 225)

Lodz

(420, 250)

Hamburg

(90, 340)

100
Leipzig

(180, 225)

Budapest

(390, 50)

180
210
Prague

(240, 160)

Gdansk

(370, 360)

90
Krakow

(400, 170)

Munich

(150, 60)

Frankfurt

(40, 160)

120

Frankfurt

(40, 160)

50

Using the load-distance technique:

Comparative chart analysis was used to identify the site of distribution that is placed optimally w.r.t the customer
sites.The five potential sites were Dresden, Lodz, Hamburg, Gdansk, and Frankfurt. & customer locations were
Vienna, Leipzig, Budapest, Prague, Krakow, Munich, and Frankfurt. The distances of all customer location from
each distribution site were obtained using standard map of Europe. The data is represented in the form of cross
table as shown below.

Sites
Dresd
on

Lodz

Distance in
miles
time taken to
reach
miles
time
miles
time

No. of containers to be shipped to the following places

Vienna

Leipzig

Budapest

308
74
5 hr 40
1 hr 22 7 hr
min
min
min
365
385
6 hr 48
6 hr 14 8 hr

426
13

Prague

98.4

Krakow

Munich

325
5 hr 22 4 hr
2 hr
min
min
484
339
164
18
6 hr 56 3 hr 26 9 hr

Frankfurt

286
34
4 hr
min
631
51
9 hr

288
34
609
31

Total

1805.
4

2977

Hamburg

miles

Gdansk

time
miles

Frankfurt

time
miles
time

min

min

min

min

610
10 hr 13
min
569
10 h 4
min
446
7 hr 17
min

246
4 hr 4
min
456
7 hr 58
min
243
3 hr 55
min

732
11 hr 48
min
689
11 hr 37
min
601
9 hr 30
min

404
6 hr 56
min
545
9 hr 32
min
321
5 hr 19
min

min

min

min
483
310
7 hr 39
5 hr 5
9 hr
min
min
368
702
680
6 hr 38 11 hr 36 11 hr 17
min
min
min
605
244
0
9 hr 28
min
4 hr
562

This table suggest that Dresdon could be an ideal site from where customers
location is nearby, Given that there is uniform supply to each customer location. .
Graphical representation further gives clearer picture.
However, since the supply is not uniformly distributed there will be different
charges involved in shipping of the container site is assumed that shipping
container costs Rs X/ mile & that this price is uniform throughout Europe.
Hence it is not possible to identify the distribution site solely using Table -1.

Distribution of centrewise distance from site to customer's location

Ditance from800
the sites to Vienna

Ditance from the sites to Leipzig

700
600
Ditance from the sites to Budapest
500

Ditance from the sites to Prague

Distance in miles 400

300
Ditance from the sites to Krakow

Ditance from the sites to Munich

200
100
Ditance from the
0 sites to Frankfurt
Dresdon
Lodz

Hamburg

Gdansk

Frankfurt

Potential sites

Table _ 2
Sites

Price factor involved in shipping from the distribution site

to
Vienna

Dresd

4928

Leipzig

7400

Budapest

76680

Prague

20664

Krakow

2925

Munich

3432

Frankfurt

14400

Total
23199

3347

4009

2460

en
Lodz
Hamburg
Gdansk
Frankfurt

0
5840
0
9760
0
9104
0
7136
0

3850
0
2460
0
4560
0
2430
0

87120

71190

131760
124020

84840
11445
0

108180

67410

0
1476
0
5058
0
3312
0
5445
0

0
7572
0
5796
0
8424
0
2928
0

30450
15500
34000
0

4
37614
0
46284
0
52647
0
35498
0

it indicates price factor involvedd in shipping containers to customer location

from each distribution site. This takes care of supply being on uniform. This is
obtained by multiplying each entry of table 1 by no of containers (specific to the
customer location)
We can use this table to conclude which distribution site involves minimum price
factor. This conclusively suggest that company AIAI should open distribution site
at dresdon
Here we have made the assumption that shipping rates are directly dependent
on no of containers.

Prcie factor associated with shipping

140000
120000
100000
80000
60000
40000
20000
0

Dresden

Lodz

Hamburg

Gdansk

Frankfurt

Price factor involved in shipping from the distribution site to Vienna

Price factor involved in shipping from the distribution site to Leipzig
Price factor involved in shipping from the distribution site to Budapest
Price factor involved in shipping from the distribution site to Prague
Price factor involved in shipping from the distribution site to Krakow
Price factor involved in shipping from the distribution site to Munich
Price factor involved in shipping from the distribution site to Frankfurt