Presentation on theme: "Fowler Distributing Company Proposal Consultants: Anthony Vatterott, Brian Vincenz, Tiffany Bowen."— Presentation transcript:
Fowler Distributing Company Proposal Consultants: Anthony Vatterott, Brian Vincenz, Tiffany Bowen
Background Information Fowler Distributing Company Beer and wine distributor 5 vehicles available for use Vehicle capacity = 500 cases of beer Distributing from local warehouse to 21 different “pre-sell accounts” located 1 to 35 miles from the warehouse Various time window challenges to meet Find less expensive, more efficient way to meet customer’s delivery needs
Current Routes - Summary Baseline cost $216,180 per year Five routes Overtime cost - $295 per year Time windows met Some inefficiencies
Improved Routes - Summary Baseline cost $188,652 per year Time windows met Five routes No overtime Savings of $ per day Annual savings of $27,527 (12.7%)!
Savings With Larger Trucks? Option to replace some or all 500 case capacity trucks with 800 case capacity trucks 30¢ more per mile ($1.50 vs. $1.20) Solution: No combination of 800 and 500 trucks gives a better solution.
Use Larger Vehicles Best route using one or more 800 capacity trucks. Cost: $195,793/ year FOUR routes Three 800 capacity One 500 capacity Annual cost increase: $7,140
Cash Flow with Larger Trucks Sell 4 used 500 case capacity trucks + $10,000 each = $40,000 Buy 3 new 800 case capacity trucks - $ 3,523 each = $10,568 Maximum cost per truck to break even after 4 years $10,568 for three trucks is not realistic
Rising Fuel Costs If fuel costs increase more than 80¢ per mile, 800 capacity trucks become more cost-effective.
With time windowsWithout time windows
No Time Windows - Summary Cost $187,985 per year Five routes No overtime cost Removed time windows – affects 2 customers Time windows cost Fowler $667 per year
Time Windows – Ranked List RankCustomer(s)Time Window 112 & 78:00am – 8:30am 2138:00am – 10:30am 3108:00am – 10:45am These customers’ time windows have the greatest impact on costs.
Financial Incentive Options Option # 1Option # 2 CustCurrent Time Window Time Change Annual Incentive Time Change Annual Incentive 12 8:00am – 8:30am 6:45am – 8:00am $300 1:00pm – 2:00 pm $ :00am – 8:30am No change - 11:00 – 12:30pm $ :00am – 10:30am No change :00am – 10:45am 10:45am – 12:30pm $300 No change -
Financial Incentives - Summary Very small incentive Difficult to get customers to agree to the changes Annual savings for Fowler after incentives is only $67.50 Is saving $667 per year worth asking customers to consider other delivery times?
Key Issues Change warehouse location. Address union fringe benefits. The cost of fuel is always unknown, so this is a variable risk. Adjust warehouse working hours. Utilize one or two smaller trucks to save fuel expenses.
Our Proposal Adjust the routes to optimal solution $188,652 per year Use 500-capacity trucks Saves Fowler $27,527 per year All time windows met No overtime costs No additional vehicle purchases Do not offer incentives for adjusting time windows since savings is insignificant.