DB 8327 Strayer University Illinois Quality Parts Discussion DB8327 Response to classmate (Sandy Sweat) The reading below will focus on questions regardi

DB 8327 Strayer University Illinois Quality Parts Discussion DB8327

Response to classmate (Sandy Sweat)

The reading below will focus on questions regarding the Illinois Quality Parts case study. This discussion will mention information regarding the mileage cost, the freight cost, and the distance between customers and their warehouse.

Application

The company Illinois Quality Parts Inc is a large distributor of industrial parts and components. According to Watson et al. (2013), the company sells different components such as bearings and belts that are used by manufacturers to make automotive, heavy equipment and industrial parts. In cities Riverside, California, Addison, Illinois, and Bridgewater, New Jersey are the locations in which the products are housed. Equipment manufacturers, small distributors and retailers are among the customers that the company Illinois Quality Parts cater to. For the transportation cost, the company uses an optimized baseline approach, which serves as an anchor. Researched by Watson et al. (2013), an optimized baseline cleans up the baseline, while sustaining a model of what should have happened.

a. Even though we applied a rate of $2/mile, the table (total cost / total miles) shows a rate higher than $2/mile for all warehouses. Why is that? (Hint: Think about the fact that the true transportation rates include minimum charges.) Because true transportation rates include minimum charges, the actual transportation rate could be higher than the minimum charge. Because of the actual mileage to the different locations, the additional cents are the actual costs

b. The solution with the best two warehouses shows an average distance to the customers that is 144 miles higher than the optimized baseline with optimal customer assignments. However, the freight costs for the two scenarios are very close (~$74 million). How can you explain this? The best two warehouses are Baltimore, MD, and Denver CO. What labels these locations as the best warehouses is the match of their freight cost and the and the average distance to customers.

c. When we look at the results of the scenarios shown in Figure 8.10, it looks as though some customers are not assigned to their closest warehouse. Why is that? Does that make sense? Because this company uses the optimization baseline model, this defines why customers are not assigned to their closest warehouse. The optimization baseline model uses all existing facilities, uses existing assignment of facilities to customers, and sometimes let customers receive products from other warehouses.

Conclusion

The company Illinois Quality Parts is a company that manufactures parts that are sold to different companies such as retailers and manufactures. In locations such as California, Illinois and New Jersey are where the products are kept. For their transportation approach, the company uses the optimization baseline model approach, this approach includes all facilities, despite the distance of the warehouse to the customer.

Reference

Watson, M., Lewis, S., Cacioppi, & Jayaraman, J. (2013). Supply chain network

design: Applying optimization and analytics to the global supply chain. Upper Saddle River, NJ: Pearson.

Response