Q1
BSG Co. is a white goods (refrigerators, washing machines, etc,) retailer in Ohio, USA. Their outlets are located in Cincinnati, Columbus, and Cleveland with equal sales in each city. All of their products are imported in sea containers which arrive from Shanghai, China by the ocean to LA/Long Beach, California and are then trucked from Long Beach to their distribution
Center (DC) in Columbus. The product is then distributed by truck from DC to their outlets. In 2013 they imported 100 FEUs per week and they expect to maintain the same rate in 2015. Each container weighs about 10 tons fully loaded.
BSG's Logistics group is attempting to reduce their logistics spend in 2015 and is investigating the use of intermodal shipments for transportation within the US from the port to the DC. They have narrowed their choices down to two alternatives:
(a) Rail from LA to Chicago, truck from Chicago to Columbus DC, and
(b) Rail from LA to Columbus DC.
You are the logistics consultant hired to help them develop these alternatives for 2015.
(1) Build a rough business case comparing the current transportation (truck from LA/Long Beach) to the proposed alternatives.
(2) Based on your answer and your findings in (1), are there any other recommendations (quantitative and qualitative) that you would make to BSG on their transportation network.
Some useful data:
Transportation cost ($/ton) = A + B * distance in miles
A
B
Rail
$124
$0.1
Truck
$26
$0.5
Distance (in miles)
Chicago
Columbus
Cincinnati
Cleveland
Los Angeles
2000
2200
2000
2400
Columbus
300
100
100
Cincinnati
300
200
Cleveland
400
Q1
BSG Co. is a white goods (refrigerators, washing machines, etc,) retailer in Ohio, USA. Their outlets are located in Cincinnati, Columbus, and Cleveland with equal sales in each city. All of their products are imported in sea containers which arrive from Shanghai, China by the ocean to LA/Long Beach, California and are then trucked from Long Beach to their distribution
Center (DC) in Columbus. The product is then distributed by truck from DC to their outlets. In 2013 they imported 100 FEUs per week and they expect to maintain the same rate in 2015. Each container weighs about 10 tons fully loaded.
BSG's Logistics group is attempting to reduce their logistics spend in 2015 and is investigating the use of intermodal shipments for transportation within the US from the port to the DC. They have narrowed their choices down to two alternatives:
(a) Rail from LA to Chicago, truck from Chicago to Columbus DC, and
(b) Rail from LA to Columbus DC.
You are the logistics consultant hired to help them develop these alternatives for 2015.
(1) Build a rough business case comparing the current transportation (truck from LA/Long Beach) to the proposed alternatives.
(2) Based on your answer and your findings in (1), are there any other recommendations (quantitative and qualitative) that you would make to BSG on their transportation network.
Some useful data:
Transportation cost ($/ton) = A + B * distance in miles
|
A |
B |
|
|
Rail |
$124 |
$0.1 |
|
Truck |
$26 |
$0.5 |
Distance (in miles)
|
|
Chicago |
Columbus |
Cincinnati |
Cleveland |
|
Los Angeles |
2000 |
2200 |
2000 |
2400 |
|
Columbus |
300 |
|
100 |
100 |
|
Cincinnati |
300 |
|
|
200 |
|
Cleveland |
400 |
|
|
|
