LM504 Logistics Practice in China

Assignment 1 (Due Monday, April 23, 2018)

1. Read the case of Tricon Logistics China, and answer the following questions:

(a). Summarize the case in one page.

(b). Analyze the main characteristics of the current logistics processes at the TLC.
What are the advantages and disadvantages?
(c). Suggest ways for improving the current logistics process, and discuss possible
social, economical, cultural, and political impacts that may hinder the implementation
of your suggestions.
(d). Describe the current AOP mechanism and the current approach of cost allocation
adopted by the TLC. What are the major challenges and problems? Suggest possible
better alternatives.

2. Gree Electronics is a famous Chinese manufacturer of air conditioners. The

company has a single manufacturing facility in Zhuhai, Guangdong. Gree Electronics
distributes its products through five regional warehouses located in Chongqing, Hefei,
Zhengzhou, Wuhan, and Shijiazhuang. In the current distribution system, China 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
warehouse 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, Gree has seen a significant increase in competition and huge pressure
from their customers to improve service level and reduce costs. To improve service
level and reduce costs, Gree 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.

(a). Describe how you would design a new logistics network consisting of only a
single warehouse.
(b). Provide an outline of such an analysis: What are the main steps?
(c). Specifically, what data would you need?
(d). What are the advantages and disadvantages of the newly suggested distribution
strategy relative to the existing distribution strategy?
3. Haier Corporation has a one-year contract to supply motors for all washing
machines produced by Rinso Ltd. Rinso manufactures the washers at four locations:
New York, Fort Worth, San Diego, and Minneapolis. Due to varying production and
transportation costs, the profit Haier earns on each 1,000 units depends on where they
were produced and where they were shipped. The following table gives the
accounting department estimates of the dollar profit per unit. (Shipment will be made
in lots of 1,000). The supply (capacity) and demand information is also given in the
table.

From/To New York Fort Worth San Diego Minneapolis Supply

Boulder 7 11 8 13 100,000
Macon 20 17 12 10 100,000
Gary 8 18 13 16 150,000
Requirements 50,000 70,000 60,000 80,000

Given profit maximization as a criterion, Haier would like to determine how many
motors should be produced at each plant and how many motors should be shipped
from each plant to each destination.