What is your recommendation to Bob Barley? Elise Lovejoy, the new logistics coor
ID: 353046 • Letter: W
Question
What is your recommendation to Bob Barley?
Elise Lovejoy, the new logistics coordinator at Spartan Plastics, was looking at the stack of papers before her and at the two computer screens in front. It was Friday afternoon-the Friday before the long weekend-and she still had not come to resolution. She knew that first thing Tuesday morning she would have a meeting with Bob Barley, CEO and major owner of Spartan Plastics. The issue that they would be discussing: how to get the increasing shipping costs under control. With the forecasts for the upcoming year looking promising, shipping volumes were expected to increase by 10 to 25 percent. Consequently, the shipping costs had to be addressed because, simply put, they were too high Spartan Plastics-Background Information Spartan Plastics was a medium-sized producer of highquality, highly engineered plastic components. These components were typically found on the interior of most trucks and cars They tended to come in variety of colors and finishes-everything from small door panels to panels that looked like wood. Typically, their critical major customers consisted of the Big Three (General Motors, Ford, and Chrysler) and were located in the Detroit-Toledo-Lansing area. During the last year, Spartan Plastics had shipped approximately 10,000 pounds of components per day to each assembly plant served. Located in St. Louis, MO (where the company was known for its aggressive policy of recruiting minorities for its workforce and for its progressive supplier diversification program), Spartan Plastics employed 450 people: 200 direct assembly line employees, 150 engineers, and 100 others. Originally begun in 1976, the company had grown quickly. However, management's primary focus was on engineering and product design. Management's mantra was simple and known to everyone: high-quality components, designed right, built right, sold at a fair price, and delivered on-time.Explanation / Answer
For Consolidated Shipping
Total Distance Travelled = 487+88+65 = 640
Price per distance = 6
Cost for distance travelled = 640*6 = 3840
No. of Stops = 3
Cost per stops = 250
Cost for stops = 3*250 = 750
Total Cost Incurred = 750+3840 = 4590
For Amalgamated Integrated Services-
Distance Travelled = 521
Cost per mile = 6
Cost for Distance Travelled = 521*6 = 3126
Cross Shipment cost to each assembly = 500
Total number of Assembly = 3
Total Cost for cross shipment to all assembly = 1500
Total Cost Incurred = 3126+1500 = 4626
The cost incurred through Consolidated Shipping is less than Amalgated Integrated Services by= 4626- 4590 = 36
So We would recommend Consolidated Shipping to Bob Barley
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