HHMM Inc., a clothing retail firm that operates in the USA is planning to expand
ID: 382879 • Letter: H
Question
HHMM Inc., a clothing retail firm that operates in the USA is planning to expand its operations in Europe by opening warehouses. The firm has identified m cities across Europe where its major clients are, and it has defined n potential locations where to locate the new warehouses. Each city has a demand ai to be satisfied. The department of logistics has defined a transportation cost matrix between each city and each potential location, where tij is the unit transport cost between city i and potential location j.
the objective of the firm is to find the minimum number of warehouses needed and where to locate them, in order to obtain total coverage (delivery of the product) of its clients within T hours. Define parameters, variables, constraints and objective, and formulate the problem.
After solving the model, the board of directors is not satisfied with the results obtained, since the cost of opening new warehouses in Europe may vary across countries and cities. Therefore, it is decided to modify the objective used. The new objective is to minimize opening costs fj in order to cover all the clients within T hours. Formulate the new objective.
Still not satisfied with the results obtained, the board decides to abandon the objective of total covering within T, and it is decided to obtain the number and location of the new warehouses by minimizing total costs (fixed costs + transportation costs). Redefine variables, constraints and objective to formulate the problem.
Explanation / Answer
To expand the clothing retail in Europe it requires a lot of market research and follows up on the strategies to ensure a good coordination with the organization and the clients and to lower the transportation cost. The strategies required to develop that will help the organization to meet all the needs. Newly setting of the company requires a lot of involvement to fix many things that come in the front end; there can be the competitive influence that partly affects to choose the best way out to take several decisions to set up the business in the market.
To introduce new warehouses it is required to know about the areas and different constraints, which might help the organization to deal with the clients more easily. As setting up of a new warehouse requires a huge financial usage, so to ensure a productive business it is required to get maximum profit from the dealings with the clients and to lower the transportation cost by providing them the fast service to head up the process comfortably. The research is the prime aspect that requires targeting the potential clients based on locations or areas, which is mostly concentrating part of this type of business. The warehouse set up with mass volume of supply is required to be preserved so to provide the necessary items within a very short time and to minimize the transportation charges which are unnecessary misusing due to the wrong planning of setting up and unproven strategies.
Marketing knowledge and idea are the most important aspects of business, which are required to identify for achieving the best marketing decisions, how to place the market strategies? Two-way approaches are required; the first is profit to the organization and second is high-quality client satisfaction by lowering the transportation cost. Both the process needs an effective planning and proven strategies then only the outcome will be positive on both the side and the organization will get the scope to open many new warehouses at different parts of the country to do a growth full business with satisfying the clients.
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