Fowler Distributing Company Proposal Consultants Anthony Vatterott Brian

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

Background Information n 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 n n n Baseline cost $216, 180 per year Five routes Overtime cost - $295 per year Time windows met Some inefficiencies

Before After

Improved Routes - Summary n n n Baseline cost $188, 652 per year Time windows met Five routes No overtime Savings of $110. 11 per day Annual savings of $27, 527 (12. 7%)!

Savings With Larger Trucks? n n n 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 n n n Best route using one or more 800 capacity trucks. Cost: $195, 793/ year FOUR routes Three 800 capacity § One 500 capacity § n Annual cost increase: $7, 140

Cash Flow with Larger Trucks n n 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 n If fuel costs increase more than 80¢ per mile, 800 capacity trucks become more cost-effective.

Without time windows With time windows

No Time Windows - Summary n n n 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 n Rank Customer(s) Time Window 1 12 & 7 8: 00 am – 8: 30 am 2 13 8: 00 am – 10: 30 am 3 10 8: 00 am – 10: 45 am These customers’ time windows have the greatest impact on costs.

Financial Incentive Options Option # 1 Cust Current Time Window Time Change 12 8: 00 am – 8: 30 am 6: 45 am – 8: 00 am 7 8: 00 am – 8: 30 am Option # 2 Annual Incentive Time Change Annual Incentive $300 1: 00 pm – 2: 00 pm $300 No change - 11: 00 – 12: 30 pm $300 13 8: 00 am – 10: 30 am No change - 10 8: 00 am – 10: 45 am – 12: 30 pm $300 No change -

Financial Incentives - Summary n n 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 n n n 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 n Adjust the routes to optimal solution $188, 652 per year § Use 500 -capacity trucks § n Saves Fowler $27, 527 per year All time windows met § No overtime costs § No additional vehicle purchases § n Do not offer incentives for adjusting time windows since savings is insignificant.