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Fowler Distributing Company Proposal Consultants: Anthony Vatterott, Brian Vincenz, Tiffany Bowen.

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Presentation on theme: "Fowler Distributing Company Proposal Consultants: Anthony Vatterott, Brian Vincenz, Tiffany Bowen."— Presentation transcript:

1 Fowler Distributing Company Proposal Consultants: Anthony Vatterott, Brian Vincenz, Tiffany Bowen

2 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

3 Current Routes - Summary Baseline cost $216,180 per year Five routes Overtime cost - $295 per year Time windows met Some inefficiencies

4 BeforeAfter

5 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%)!

6 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.

7 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

8 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

9 Rising Fuel Costs If fuel costs increase more than 80¢ per mile, 800 capacity trucks become more cost-effective.

10 With time windowsWithout time windows

11 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

12 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.

13 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 -

14 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?

15 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.

16 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.


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