BeeRUS is a beer distributor that handles the distribution for beer for large re

Question

BeeRUS is a beer distributor that handles the distribution for beer for large retails chains, however, it also has its own retail outlets, selling beer throughout Florida. BeeRUS is facing a couple of important business decisions.

1. The Operations Management team needs to determine how to best distribute beer from its warehouses to its retail outlets, as it recently added 4 new retail outlets, straining the distribution system. Historic data from the current outlets was collected for revenue, traffic patterns close to the retails outlets, population over 21 years as well as the marketing budget of the respective outlet (see input data file). The respective data for traffic patterns, population over 21 and marketing budget are also given for the four new locations. This data can be used to find an appropriate model to predict the expected sales at the four new retail outlets (Note: you need to analyze all three variables and all possible combinations of all three variables to decide on the best model)

2. Furthermore, the input data file contains information about additional capacity of four warehouses and estimated transportation costs from each of the warehouses to the four new locations (the distribution to current outlets is taken care off and therefore does not need to be considered). Suggest the most economic distribution method that matches warehouse capacity with predicted retail outlet demand.

3. To alleviate the strained distribution system, BeeRUS is considering the opening of an additional distribution center. distribution center. The Operations Management team estimated that the predicted demand (from part 1) may change depending on the economic development. At the moment the economy is stagnant. If the economy improves, the team estimates and increase in sales of 10%, however a decrease in sales of 20% if the economy deteriorates even more. There is a probability of 50% that the economy remains as is, while it is 30% likely that it will improve and 20% likely it will get worse. Beer is sold at an average price of $1.80. The operating costs of the additional distribution center are estimated to be $0.70 for the large facility, $0.50 for the medium, and $0.35 for the small facility, respectively (the initial investment is covered by available funds). Furthermore, a marketing firm has offered to run a large promotional campaign, which would cost $4000. The firm promises that the campaign would result in an increase in sale of 14%, regardless of economic situation.

Instructions: You will need to determine yourself which of the Excel models we worked on are appropriate for each of the scenarios (there is only one correct model per scenario). The results of the first scenario provide input data for scenario 2 and 3. The 4th scenario is independent. If errors are made in scenario 1, there is no further penalty for using incorrect data for scenario 2 and 3.

Needed Excel file can be found by using: https://drive.google.com/folderview?id=0B95SY57Hrg0OU01tTWJZR2NBcVU&usp=sharing

Explanation / Answer

INCREASES THE SALES IN TALLAHASSE

TRANSPORATION COST OF TALLAHASSE IS LOWER THAN OTHER OUTLET

A+B+C+D=$0.40+$0.30+$0.35+$0.45

=$1.5

OPERATING COST IS =$0.70

ADD BOTH COST FOR LARGE =$0.70 +$1.5 =$2.2+$4,000+14% INCREASE IN SALE

COST FOR MEDIUM= $0.50+$1.5=$2+$4,000+14% INCREASE IN SALE

COST FOR SMALL=$ $0.35 +$1.5=$1.85 +$4,000+14% INCREASE IN SALE

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