This spreadsheet supports STUDENT analysis of the case “Transportation and Consolidation at Elevalt Ltd.

”
(UVA-OM-1490).

This spreadsheet was prepared by Assistant Professor Jeremy Hutchison-Krupat. Copyright © 2013 by the University of Virginia Darden School Foundation,
Charlottesville, VA. All rights reserved. For customer service inquiries, send an e-mail [email protected]. No part of this publication may be
reproduced, stored in a retrieval system, posted to the Internet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or
otherwise—without the permission of the Darden School Foundation.

Rev. Aug. 12, 2014

Instructions:

- Using the the information from "Relevant Data for Inventory and Transportation Calculations" and the 2011 data (rows 3 through 75) fill in the orange-shaded
cells in rows 77–88.
- Once values have been entered into the orange shaded cells pertaining to the inventory data (rows 77–88), the subsequent table (rows 93–146) will then be
populated with data according to your inventory values.
- Next you will need to determine what orders will be placed. Do this by filling in the orange-shaded cells in rows 148–201.
- Once the order quantity has been entered the number of truckload and less than truckload shipments will automatically be calculated.
- Lastly, you will need to fill in the relevant cost information (rows 342–44, 357–59, and 362–64.)

Relevant Data for Inventory and Transportation Calculations

Description Diamond Drill
% of Elevalt business represented by this diamond drill 2.60%
Elevalt holding cost 18.00%
Target service rate 98.00%
Unit cost $16,000
Lead time from supplier to Elevalt 3 weeks
Ordering cycle Monthly (4 weeks)
Items per pallet 1
Pallets per truckload (TL) 32

Current Network of Centralized in

DCs Germany Centralized in Sudan
Inbound per-pallet cost (shipped as TL) $20.00 $20.20 $20.60
Inbound per-pallet cost (shipped as LTL) $62.00 $62.70 $63.90

Dar Es Salaam Edinburgh Oslo Port Sudan Centralized (Consolidate all

Week Ending Bremen (Germany) Baku (Azerbaijan) (Tanzania) (UK) (Norway) (Sudan) DCs)
May 11, 2011 56 15 9 9 4 14 107
May 18, 2011 132 12 12 14 23 11 204
May 25, 2011 143 17 18 13 9 15 215
June 1, 2011 169 18 11 3 7 17 225
June 8, 2011 110 11 8 16 2 6 153
June 15, 2011 196 13 16 4 18 9 256
June 22, 2011 173 5 23 4 16 14 235
June 29, 2011 137 17 10 12 15 1 192
July 6, 2011 87 13 11 3 9 27 150
July 13, 2011 40 5 14 10 12 14 95
July 20, 2011 195 16 10 10 18 22 271
July 27, 2011 168 19 17 12 10 23 249
August 3, 2011 233 10 5 10 2 16 276
August 10, 2011 105 14 4 27 13 10 173
August 17, 2011 130 12 21 16 20 20 219
August 24, 2011 85 15 15 4 23 9 151
August 31, 2011 143 3 15 13 2 3 179
September 7, 2011 177 9 9 3 3 16 217
September 14, 2011 149 26 12 14 19 9 229
September 21, 2011 132 8 13 6 2 19 180
September 28, 2011 212 6 6 8 1 10 243
October 5, 2011 63 21 13 16 18 17 148
October 12, 2011 82 17 9 15 7 14 144
October 19, 2011 143 15 14 10 11 9 202
October 26, 2011 131 9 18 15 11 15 199
November 2, 2011 99 10 11 9 14 12 155
November 9, 2011 134 11 13 4 14 15 191
November 16, 2011 99 15 14 6 10 12 156
November 23, 2011 169 6 16 19 10 6 226
November 30, 2011 184 11 21 21 12 9 258
December 7, 2011 110 16 17 14 12 4 173
December 14, 2011 141 9 15 16 4 6 191
December 21, 2011 118 9 15 13 8 12 175
December 28, 2011 109 14 16 17 6 6 168
January 4, 2012 139 8 12 18 5 0 182
January 11, 2012 81 9 17 2 10 17 136
January 18, 2012 105 6 10 5 24 10 160
January 25, 2012 199 14 17 18 5 19 272
February 1, 2012 160 12 16 2 10 16 216
February 8, 2012 198 15 13 12 1 20 259
February 15, 2012 218 20 16 16 5 20 295
February 22, 2012 120 23 14 10 12 1 180
February 29, 2012 248 5 12 12 14 20 311
March 7, 2012 71 17 19 0 13 7 127
March 14, 2012 70 14 0 17 8 7 116
March 21, 2012 207 2 13 4 13 11 250
March 28, 2012 182 13 15 20 12 16 258
April 4, 2012 210 6 8 13 8 13 258
April 11, 2012 131 14 17 19 14 19 214
April 18, 2012 125 0 26 15 12 13 191
April 25, 2012 31 6 5 20 10 9 81
May 2, 2012 191 16 8 10 17 3 245

Target Inventory Level 1252 114 119 113 107 120 0 1680

Average Demand 139 12 13 12 11 12 199

Std Dev of Demand 51 5 5 6 6 6 53
Q-avg 557 48 53 46 43 49 797
Cycle Stock Cost $802,281 $69,452 $76,320 $66,351 $61,809 $71,225 $1,147,438

Std Dev (P+L) 135 14 13 16 16 16 139

Safety Stock 277 29 27 33 32 33 286
Safety Stock Cost $798,740 $84,949 $76,594 $94,277 $92,145 $95,518 $823,252
Total Holding Cost (for
this item) $1,601,021 $154,401 $152,914 $160,628 $153,955 $166,743 $1,970,690

Total Overall Holding Decentralized Centralized

Cost (scaled for all
items) $91,910,051 $75,795,771

On-Hand On-Hand On-Hand On-Hand

Action Week Ending On-Hand Inventory Inventory On-Hand Inventory Inventory Inventory Inventory On-Hand Inventory
May 4, 2011 600 89 87 92 88 92 902
Place order May 11, 2011 544 74 78 ### ### 78 795
 May 18, 2011 412 62 66 ### ### 67 591
May 25, 2011 269 45 48 ### ### 52 376
Receive order June 1, 2011 808 67 78 ### ### 77 1036
Place order June 8, 2011 698 56 70 ### ### 71 883
June 15, 2011 502 43 54 ### ### 62 627
June 22, 2011 328 38 31 ### ### 48 391
Receive order June 29, 2011 745 79 70 ### ### 96 996
Place order July 6, 2011 658 66 59 ### ### 69 846
July 13, 2011 618 61 45 ### ### 55 751
July 20, 2011 423 45 35 ### ### 33 480
Receive order July 27, 2011 849 74 78 ### ### 61 1065
Place order August 3, 2011 616 64 73 ### ### 45 789
August 10, 2011 511 50 69 ### ### 35 616
August 17, 2011 381 38 48 ### ### 15 397
Receive order August 24, 2011 933 73 79 ### ### 81 1138
Place order August 31, 2011 789 70 64 ### ### 78 958
September 7, 2011 612 61 55 ### ### 62 741
September 14, 2011 463 35 43 ### ### 53 512
Receive order September 21, 2011 794 71 85 ### ### 76 1053
Place order September 28, 2011 582 65 79 ### ### 66 811
October 5, 2011 518 44 66 ### ### 49 662
October 12, 2011 436 27 57 ### ### 35 518
Receive order October 19, 2011 964 61 83 ### ### 80 1186
Place order October 26, 2011 833 52 65 ### ### 65 987
November 2, 2011 734 42 54 ### ### 53 832
November 9, 2011 600 31 41 ### ### 38 641
Receive order November 16, 2011 921 78 81 ### ### 81 1179
Place order November 23, 2011 752 72 65 ### ### 75 953
November 30, 2011 568 61 44 ### ### 66 695
December 7, 2011 458 45 27 ### ### 62 522
Receive order December 14, 2011 818 78 66 ### ### ### 1059
Place order December 21, 2011 701 69 51 ### ### 89 885
December 28, 2011 591 55 35 ### ### 83 716
January 4, 2012 452 47 23 ### ### 83 534
Receive order January 11, 2012 923 83 74 ### ### 97 1194
Place order January 18, 2012 818 77 64 ### ### 87 1034
January 25, 2012 618 63 47 ### ### 68 761
February 1, 2012 458 51 31 ### ### 52 545
Receive order February 8, 2012 695 73 73 ### ### 65 933
Place order February 15, 2012 477 53 57 ### ### 45 638
February 22, 2012 357 30 43 ### ### 44 458
February 29, 2012 109 25 31 ### ### 24 147
Receive order March 7, 2012 813 69 74 ### ### 92 1062
Place order March 14, 2012 743 55 74 ### ### 85 946
March 21, 2012 535 53 61 ### ### 74 695
March 28, 2012 353 40 46 ### ### 58 437
Receive order April 4, 2012 653 93 83 ### ### 80 914
Place order April 11, 2012 522 79 66 ### ### 61 700
April 18, 2012 397 79 40 ### ### 48 509
April 25, 2012 366 73 35 ### ### 39 428
Receive order May 2, 2012 905 92 80 ### ### 95 1163

Order Qty Order Qty Order Qty

Week Ending Order Qty Placed Order Qty Placed Order Qty Placed Placed Placed Placed Order Qty Placed
May 4, 2011
May 11, 2011 708 40 41 30 23 42 0 885
May 18, 2011
May 25, 2011
June 1, 2011
June 8, 2011 554 58 49 46 41 49 0 797
June 15, 2011
June 22, 2011
June 29, 2011
July 6, 2011 594 48 60 23 58 51 0 834
July 13, 2011
July 20, 2011
July 27, 2011
August 3, 2011 636 50 46 42 42 75 0 891
August 10, 2011
August 17, 2011
August 24, 2011
August 31, 2011 463 44 55 60 58 42 0 722
September 7, 2011
September 14, 2011
September 21, 2011
September 28, 2011 671 49 40 31 25 54 0 870
October 5, 2011
October 12, 2011
October 19, 2011
October 26, 2011 419 62 54 56 47 55 0 693
November 2, 2011
November 9, 2011
November 16, 2011
November 23, 2011 500 42 54 38 48 45 0 727
November 30, 2011
December 7, 2011
December 14, 2011
December 21, 2011 552 45 68 64 36 31 0 796
December 28, 2011
January 4, 2012
January 11, 2012
January 18, 2012 435 37 55 42 45 33 0 647
January 25, 2012
February 1, 2012
February 8, 2012
February 15, 2012 775 61 62 48 21 75 0 1042
February 22, 2012
February 29, 2012
March 7, 2012
March 14, 2012 509 59 45 39 47 35 0 734
March 21, 2012
March 28, 2012
April 4, 2012
April 11, 2012 730 35 53 56 47 59 0 980
April 18, 2012
April 25, 2012
May 2, 2012
 Inbound Transportation Costs via Full #Truckload
Pallets by (TL) Carrier
# Pallets by
Week Ending # Pallets by TL # Pallets by TL # Pallets by TL TL TL # Pallets by TL # Pallets by TL
May 4, 2011
May 11, 2011 704 32 32 0 0 32 864
May 18, 2011
May 25, 2011
June 1, 2011
June 8, 2011 544 32 32 32 32 32 768
June 15, 2011
June 22, 2011
June 29, 2011
July 6, 2011 576 32 32 0 32 32 832
July 13, 2011
July 20, 2011
July 27, 2011
August 3, 2011 608 32 32 32 32 64 864
August 10, 2011
August 17, 2011
August 24, 2011
August 31, 2011 448 32 32 32 32 32 704
September 7, 2011
September 14, 2011
September 21, 2011
September 28, 2011 640 32 32 0 0 32 864
October 5, 2011
October 12, 2011
October 19, 2011
October 26, 2011 416 32 32 32 32 32 672
November 2, 2011
November 9, 2011
November 16, 2011
November 23, 2011 480 32 32 32 32 32 704
November 30, 2011
December 7, 2011
December 14, 2011
December 21, 2011 544 32 64 64 32 0 768
December 28, 2011
January 4, 2012
January 11, 2012
January 18, 2012 416 32 32 32 32 32 640
January 25, 2012
February 1, 2012
February 8, 2012
February 15, 2012 768 32 32 32 0 64 1024
February 22, 2012
February 29, 2012
March 7, 2012
March 14, 2012 480 32 32 32 32 32 704
March 21, 2012
March 28, 2012
April 4, 2012
April 11, 2012 704 32 32 32 32 32 960
April 18, 2012
April 25, 2012
May 2, 2012
Annual # pallets carried
inbound via TL carrier
per DC cost for inbound
Annual 7328 416 448 352 320 448
TL per DC $146,560 $8,320 $8,960 $7,040 $6,400 $8,960
Annual # pallets carried
inbound via TL carrier
all DCs 9312
Annual cost of inbound
TL carriers
Annual for allcarried
# pallets DCs $186,240
inbound via TL carrier if
TL for single item
centralized
Annual cost of inbound 10368
TL if centralized
(Germany) $209,434
Annual cost of inbound
TL if centralized (Sudan) $213,581

Annual cost of inbound

TL carriers
Annual cost for all DCs
of inbound $7,163,077
TL overall (scaled for TL if centralized
all items) (Germany)
Annual cost of inbound $8,055,138
TL if centralized
(Sudan) $8,214,646

Inbound Transportation Costs via Less than Truckload

# Pallets by (LTL) Carrier
# Pallets by # Pallets by
Week Ending # Pallets by LTL # Pallets by LTL # Pallets by LTL LTL LTL LTL # Pallets by LTL
May 4, 2011
May 11, 2011 4 8 9 30 23 10 21
May 18, 2011
May 25, 2011
June 1, 2011
June 8, 2011 10 26 17 14 9 17 29
June 15, 2011
June 22, 2011
June 29, 2011
July 6, 2011 18 16 28 23 26 19 2
July 13, 2011
July 20, 2011
July 27, 2011
August 3, 2011 28 18 14 10 10 11 27
August 10, 2011
August 17, 2011
August 24, 2011
August 31, 2011 15 12 23 28 26 10 18
September 7, 2011
September 14, 2011
September 21, 2011
September 28, 2011 31 17 8 31 25 22 6
October 5, 2011
October 12, 2011
October 19, 2011
October 26, 2011 3 30 22 24 15 23 21
November 2, 2011
November 9, 2011
 November 16, 2011
November 23, 2011 20 10 22 6 16 13 23
November 30, 2011
December 7, 2011
December 14, 2011
December 21, 2011 8 13 4 0 4 31 28
December 28, 2011
January 4, 2012
January 11, 2012
January 18, 2012 19 5 23 10 13 1 7
January 25, 2012
February 1, 2012
February 8, 2012
February 15, 2012 7 29 30 16 21 11 18
February 22, 2012
February 29, 2012
March 7, 2012
March 14, 2012 29 27 13 7 15 3 30
March 21, 2012
March 28, 2012
April 4, 2012
April 11, 2012 26 3 21 24 15 27 20
April 18, 2012
April 25, 2012
May 2, 2012
Annual # pallets carried
inbound via LTL carrier
per DC 220 214 234 223 218 198
Annual cost for inbound
LTL per DC $13,632 $13,262 $14,529 $13,849 $13,523 $12,259
Annual # pallets carried
inbound via LTL carrier
all DCs 1307
Annual cost of inbound
LTL
Annualcarriers for all
# pallets DCs
carried $81,053
LTL for single item inbound via LTL carrier
if centralized
Annual cost of inbound 252
LTL if centralized
(Germany)
Annual cost of inbound $15,790
LTL if centralized
(Sudan) cost of inbound
Annual $16,092
LTL carriers for all
DCs
Annual cost of inbound $3,117,440
LTL overall (scaled for LTL if centralized
all items) (Germany)
Annual cost of inbound $607,316
LTL if centralized
(Sudan) $618,939
Annual cost of inbound
for all DCs
Annual cost of inbound $10,280,517
Inbound transportation if centralized
(TL+LTL) scaled for (Germany) $8,662,454
all items Annual cost of inbound
if centralized (Sudan) $8,833,585

DC
Dar Es Salaam Edinburgh Oslo Port Sudan
Annual cost of outbound transportation with Bremen (Germany) Baku (Azerbaijan) (Tanzania) (UK) (Norway) (Sudan)
optimized current network of DCs (removing all $13,103,437 $1,842,806 $2,006,025 $1,783,388 $1,700,862 $1,811,563
transshipment costs)
% change in outbound transportation costs if 0.00% 4.50% 6.00% 0.75% 1.50% 3.00%
originating DC is Germany
% change in outbound transportation costs if 9.00% 3.00% 3.00% 9.00% 9.00% 0.00%
originating DC is Sudan
$13,103,437 $1,925,732 $2,126,386 $1,796,763 $1,726,375 $1,865,910
Outbound transportation costs from Germany
$14,282,746 $1,898,090 $2,066,205 $1,943,893 $1,853,940 $1,811,563
Outbound transportation costs from Sudan

Annual cost of
outbound forofall DCs
Annual cost $22,248,080
Outbound
outbound if centralized
transportation
(Germany) $22,544,603
(TL+LTL) scaled for Annual cost of
all items outbound if centralized
(Sudan) $23,856,437

Annual cost for all DCs $32,528,597

Annual cost if
Transportation overall centralized (Germany) $31,207,057
Annual cost of if
centralized (Sudan) $32,690,022

Data source: Company documents.

 Total
Holding Cost Inventory Transportation Transportation
Scenario Name Reduction Holding Cost Cost Savings Cost Cost Reduction
Current State NA ### NA ### NA
Scenario 1 - Optimized Current State 8% $91,910,051 $8,089,949 ### 19%
Scenario 2a - Germany 24% $75,795,771 $24,204,229 ### 22%
Scenario 2b - Sudan 24% $75,795,771 $24,204,229 ### 18%

Data source: Company documents.

Transportation Labor
Cost Cost Labor Cost
Savings Labor Cost Reduction Savings Total Savings
NA $30,000,000 NA NA NA
$7,471,403 $29,100,000### $900,000 $16,461,352
$8,792,943 $27,000,000### $3,000,000 $35,997,172
$7,309,978 $22,500,000### $7,500,000 $39,014,208