Presented to the Decision Sciences and Innovation Department
De La Salle University-Manila
1st Term, A.Y. 2020-2021
In partial fulfillment
of the course requirements
In DSIMGTS (C33)
SUPPLY CHAIN DESIGN (CASE ANALYSIS)
Submitted by:
Recto, Aaron Michael P.
Salvador, Mikaela Andrea G.
Samiado, Alfred Wesley E.
Santiago, Justyn Symmond O.
Submitted to:
Dr. John Elvin Lim
January 11, 2021
I. Overview
The Darby Company manufactures and distributes meters used to measure
electric power consumption. The company has a production plant in El Paso and
San Bernardino. Distribution centers were established in Fort Worth, Santa Fe,
and Las Vegas. In its current supply chain, demand at the Dallas, San Antonio,
Wichita, and Kansas City customer zones is satisfied by shipments from the Fort
Worth distribution center. In a similar manner, the Denver, Salt Lake City, and
Phoenix customer zones are served by the Santa Fe distribution center, and the
Los Angeles and San Diego customer zones are served by the Las Vegas
distribution center.
II. Objective
The primary objective of the paper is to devise a strategy that will improve the
supply chain and minimize the total cost of Darby Company. To accomplish the
objective, the group will observe the equation.
Total Cost = 13.7 (AC) + 12.7 (AD) + 14.7 (AE) + 13.9 (BD) + 11.2 (BE) + 0.3
(CF) + 2.1(CG) + 3.1(CH) + 4.4 (CI) + 6.0 (CJ) + 5.2 (DF) + 5.4 (DG) + 4.5 (DH)
+ 6.0 (DI) + 2.7 (DJ) + 4.7 (DK) + 3.4 (DL) + 3.3 (DM) + 2.7 (DN) + 5.4 (EJ) + 3.3
(EK) + 2.4 (EL) + 2.1(EM) + 2.5 (EN)
Wherein:
A: El Paso | B: San Bernardino | C: Fort Worth | D: Santa Fe | E: Las Vegas | F:
Dallas | G: San Antonio | H: Wichita | I: Kansas City | J: Denver | K: Salt Lake
City | L: Phoenix | M: Los Angeles | N: San Diego |
III. Problem
The company has not paid much attention to the efficiency of its supply chain
model despite the company’s rapid growth.
IV. Methodology
Total Supply: 50,000
Total Demand: 41,260
Legend:
A: El Paso | B: San Bernardino | C: Fort Worth | D: Santa Fe | E: Las Vegas | F:
Dallas | G: San Antonio | H: Wichita | I: Kansas City | J: Denver | K: Salt Lake
City | L: Phoenix | M: Los Angeles | N: San Diego |
Given:
Solutions:
1.
2.
3.
4. Even with the anticipated growth of 5000 meters in the next 5 years, Darby would
not need the plant expansion. El Paso’s quarterly production capacity is at 30,000
meters, while it is currently serving a capacity of 21,260 meters. The El Paso plant
has an extra capacity of 8,740, therefore satisfying the projected growth in the next
5 years.
V. Alternative Courses of Action
1. By dropping the distribution center limitations, customers could be served
by any of the distribution centers as long as costs are available. With this,
the company may be able to choose distribution centers that can offer less
expensive distribution costs than other centers.
2. Shortening the distribution chain would definitely decrease the distribution
costs for some locations. Opting for the plant-to-customer shipments in
certain locations would allow the company to offer less expensive
distribution cost to customers.
3. By converting the company’s distribution centers into distribution
channels, this will reduce distribution costs and distribution efforts
shouldered by the company. Distributors shoulders shipping costs while
still reaching net margins. Shipping costs will be fully maximized even for
small orders because it is the authorized distributors who manages
inventory and distribution directly to customers.
VI. Recommendation
The company should utilize transportation models to minimize manufacturing and
shipping costs. In order to achieve this goal, the managers will need to eliminate
the distribution centers and ship directly to the customers, which will allow them
to maximize their profit. By eliminating the distribution centers, The Darby
Company can reduce its total costs from $620,700 to $553,534, which can be
seen as a significant improvement compared to the current strategy.
