| Summary: | This study evaluates the existing system of distribution facilities for one firm and assesses the feasibility of establishing a.new warehouse. The framework
employed for analysis attempts to measure the effects of various changes in the firm's distribution network on cost reduction and sales generation.
For measurement of the cost ramifications of various warehouse location alternatives, the study establishes the inputs of market demand, warehouse capacities, and costs of distribution from warehouses to markets that are required. These inputs are then evaluated through use of a linear programme routine which has a sensitivity analysis. To evaluate the sales generation aspects of various locational alternatives, a subjective estimating procedure known as the Delphi is used. The Delphi is used specifically only to measure the relative importance of delivery times and warehouse location for the market at which the proposed warehouse is to be located, however, its general findings are also used for establishing the relative importance of customer service in all markets.
The general conclusions of the analysis are that the sales generation impact of warehouses has been overemphasized by the company studied and, as a result, it is not feasible to establish a new warehouse in the location proposed. The analysis also indicates that the firm1s existing distribution network is too decentralized and that substantial savings will result if several warehouses are abandoned. === Business, Sauder School of === Graduate
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