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Zied BABAI
Kedge Business School
Mohamed-zied.babai@kedgebs.com
Case #1: Distribution Management
for Produlact Company
Central warehouse location
Barycentre method:
Locate on the map, each city of a customer;
Get the correspondent coordinates x and y;
Give a weight to each city of a customer by considering an importance coefficient so that
you get the barycentre of the customer network. The most frequently used weights are
the ton volumes delivered to customers;
The coordinates Xb et Yb of the barycentre are calculated as follows:
X b Qi xi / Qi Yb Qi yi / Qi
i i i i
For a delivery from factories to customers via a central warehouse, the barycentre of the
network is the barycentre of both the barycentres of the customers and the factories;
Although this method is simple to use, it has a major drawback. In fact, the distances
used in this approach are unrealistic distances a vol doiseaux . Thus, the result can
be unrealistic if the cities are in regions surrounded by mountains or costs.
-3-
Central warehouse location: map coordinates
Distributed
x y tons
Bordeaux 1.6 1.3 3500
Lille 3.1 4.5 2800
Lyon 3.9 1.8 3800
Bziers 3.2 0.2 1500
Nancy 4.2 3.3 1700
Rennes 1.2 3.1 2000
Rungis 2.9 3.3 2700
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Central warehouse location: results
-5-
Central warehouse location
-7-
Scenario 2: Delivery via regional plate-forms
Total cost = Total quantity * (approach cost + Passage from quays cost +
delivered cost)
-8-
Scenario 3: Delivery via a central warehouse
Approach unit cost (for the interval 0-200 km) 0.037 /kg
Approach unit cost (for the interval 200-400 km ) 0.052 /kg
Approach unit cost (for the interval 400 km et plus) 0.06 /kg
Approach cost from Cherbourg (distance more than 400 km) 0.06 /kg
Approach cost from Auxerre (distance between 200 & 400 km) 0.052 /kg
Question 3:
In scenario 3, it would be interesting to locate the central warehouse closer to the
Auxerres factory to benefit from a lower total approach cost ?
True, obviously this results in savings for the approach cost but this also increases the
average distance to customers which increases the delivery cost.
Question 4:
If one consolidates the production of the company in the same factory site, this
enables to simplify the distribution flows and to increase the delivered volumes to each
customer, thus decreasing the distribution cost, but ..
- 10 -
Case #2: Planning with
subcontracting and Overtime for C&C
Company
- 11 -
Planning with subcontracting and Overtime
Plan 1: Produce exactly the monthly sales by varying the No. of workers
January February March April May June Total
Sales 1800 1500 1100 900 1100 1700
Production 1800 1500 1100 900 1100 1700
Stocks 0 0 0 0 0 0 0
- 13 -
Planning with subcontracting and Overtime
Plan 3: Produce at each month the minimum sales (April) by keeping a
constant No. of workers and by sub-contracting the remaining part
January February March April May June Total
Sales 1800 1500 1100 900 1100 1700
Production 900 900 900 900 900 900
Sub-contracting 900 600 200 0 200 800
Stocks 0 0 0 0 0 0 0
- 14 -
Planning with subcontracting and Overtime
Plan 4: Using overtime working instead of subcontracting the production
or dismissing workers
January February March April May June Total
Sales 1800 1500 1100 900 1100 1700
Production 1800 1500 1100 900 1100 1700
Stocks 0 0 0 0 112 356 0