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A PRODUCTION AND INVENTORY APPLICATION 337

Table 7.34 Shipping Cost Per Set from Suppliers to Distribution Centres (E)

Distribution Centre
Supplier Edinburgh Leeds Bristol
Sweden 3.20 2.20 4.20
Germany — 3.90 1.20

Table 7.35 Demand Forecast
Customer Zone Demand (sets)
Northeast 6 300
Northwest 4 880
Northern Ireland 2 130
Scotland 1 210
Southeast 6 120
Midlands 4 830
London 2 750
Wales 8 580
Southwest 4 460

Table 7.36 Shipping Cost from the Distribution Centres to the Customer Zones (E)

Customer Zone
Distribution Northern
Centre Northeast Northwest Ireland Scotland Southeast Midlands London Wales Southwest
Edinburgh 0.3 2.1 3.1 4.4 6.0 — — — —
Leeds 5.2 5.4 4.5 6.0 2.7 4.7 3.4 3.3 2.7
Bristol — — — — 5.4 3.3 2.4 2.1 2.5

minimize the total costs involved (supply costs and 2 The company is willing to consider altering its
shipping costs to zones). current strategy so that any of the three
distribution centres could supply any of the zones
Managerial Report (where this is logistically feasible). Can costs be
Because of the rapid and unplanned growth of the reduced? If so, by how much?
initiative across the UK, the current distribution 3 The charity is discussing with its Swedish and
system is relatively unplanned. However, the char- German suppliers the possibility of them
ity’s management now reckon it is time to look at supplying some of the zones directly. Under
the efficiency of the current system. You have review are the possibilities of the German supplier
been called in to undertake analysis and provide shipping directly to Wales at a cost of E0.30 per
advice. set and to the Southeast at a cost of E0.70 per
1 If the charity maintains its current supply and set. Similarly, the Swedish supplier is willing to
distribution strategy, what will its supply and ship directly to the Northwest at a cost of E3.50
distribution costs be for the coming year? per set. Would the charity reduce its costs by
doing this?

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