This case study examines reducing transportation costs through strategic warehouse placement. It details that each plant produces a single material type except plant 4, which produces types 4 and 5. The current total quarterly transportation cost is $75,031,219.44. Placing warehouses at locations 8, 13, 17, and 25 can satisfy over 80% of demand within a 500-mile radius. With warehouses, the quarterly transportation cost is reduced to $32,742,243.10, saving more than half of the original costs and allowing more timely deliveries to farther customers.
3. Given Details
Each plant produces only 1 type of materials except plant 4, which produce
type 4,5
Total transportation cost for each quarter = 75031219.44
4. Warehouse location stratergy
By Placing warehouse at locations 8, 13, 17, 25 we can satisfy more than
80% of the demand within 500 miles of radius
5. Total Savings in Transportation cost
Total transportation Cost without
warehouses= 75,031,219.44
(Quarterly)
More time for some of the customers
which are far away from the plant
Total transportation cost by
placement of warehouses=
32,742,243.10 (Quarterly)
Stock can be stored and then sent
6. Conclustion
More than half transportation cost can be saved by placement of
Warehouses each quarter by just placing 4 warehouses.
Timely delivery of products can be done to customers.
