Solution for Supply Chain Network Design: Applying Optimization and Analytics to the Global Supply Chain 1st Edition Chapter 10, Problem 1

by Michael Watson Sara Lewis Peter Cacioppi Jay Jayaraman
106 Solutions 14 Chapters 20874 Studied ISBN: 9780133017373 Supply Chain Management 5 (1)

Chapter 10, Problem 1 : 1. A popular online shoe retailer has been...

1. A popular online shoe retailer has been successfully servicing their customers across the United States with the most popular brands of shoes from tennis shoes to high heels for the past five years. The retailer sources these shoes from a wholesale shoe distributor and therefore receives all their shoe orders from the closest distributor stocking location. Due to the bulky packaging required to ensure no damage to the shoes in transit, the transportation cost is always volume dependent (or can be tied back to a per-carton cost). The supply chain modeling team has previously modeled a generic volume of shoes flowing through their network to determine optimal warehouse locations. This year, the company has decided to expand their retail footprint by beginning to offer the sale of designer formalwear such as suits and dresses as well. These products arrive in the supply chain on hangers and can’t be folded and shipped in cartons. The modeling team has determined that these products must be modeled as separate products within the network design. Explain why this is a good decision in terms of transportation and warehousing cost differences.

Step-By-Step Solution

1. For the many different types of shoes, using the carton as a unit of measure was very accurate. All cartons are about the same size. However, this would not extend well to clothes on hangers. With these new products, we’ll need at least one new product category. The cost size and cost to handle an item on a hanger is different than that of a carton. In this case, it is a good idea to have at least two product categories.

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