Alko Inc. Case Study

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FINAL EXAM: Case Study
Alko Inc.

Esaam M. Quazi
MKTG 3130
Spring 2010
M,W | 5:45 PM - 7:00 PM
Dr. Ram Rachamadugu
Consider the case, ALKO Inc., described on page 322 and 323 in the text and answer the following questions (do not consider the questions described on page 323). 1. What is the annual inventory and distribution cost of current distribution system? Total Annual Inventory and Distribution Cost | | | | | | |  | # of parts| Region 1| Region 2| Region 3| Region 4| Region 5| All Regions| | Central| Part 1| 10 | $103,729| $72,171| $56,964| $37,982| $21,260| $292,107| | $282,235| Part 3| 20 | $30,463| $56,425| $66,904| $69,161| $56,259| $279,213| | $215,356| Part 7| 70 | $49,246| $41,626| $63,051| $110,336| $124,747| $389,005| | $257,600| All Parts| | $183,439| $170,223| $186,920| $217,479| $202,266| $960,326| | $755,191|

2. What are the savings that would result from following the task force recommendation and setting up a National Distribution Center? Assume that the demands from various regions for any item are independent of each other. Make any other assumptions you need. However, clearly state them. Show details of your calculations.

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Following is data for determining an alternative suppliers schema:

Based on total cost and location, the optimal suppliers would be the suppliers that service region 1 and region 4. An annual savings of nearly $2500 can be realized because: 17,117.49 Current Estimated Total Cost

-14,693.94 New Total Cost
2,423.55 Annual Savings

The current distribution system has 100 products in line with production occurring at three firms nearby Cleveland, OH and there are company owned distribution centers in each region. The following is a flowchart of the current system:

As one can likely deduct, the current system...
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