"Fireside Tire Company, a manufacturer of radial tires for sport utility vehicles, sells its products in the automotive aftermarket and distribution them throughout the United States. Fireside has three tire production plants located in Allentown, Pennsylvania; Toledo, Ohio; and Macomb, Illinois (see map). Normally, Fireside ships tires from its plants to distribution centers, but truckload-size purchases typically are transported directly from plants to customer locations. All shipments to a region move under truck-load rates applying to a minimum weight of 40,000 pounds, or 400 cwt.
Fireside management is concerned about the most economical location for a distribution center to serve its southeastern region, consisting of North Carolina, South Carolina, Georgia, Florida, Mississippi, Alabama, and southeastern Tennessee. Although an Atlanta distribution center currently serves this region, Fireside management is concerned that the Atlanta location is nolt the most logistically sound alternative.
To help the logistics department conduct an analysis of this region's distribution center location using the grid method. Fireside's transportation department developed the following data based on projections for 2008:
2008 Shipments to Atlanta Grid Coordinates
From CWT RATE/CWT Mileage Horizontal Vertical
Toledo 15K $2.20 640 1,360 1,160
Macomb 5K $2.43 735 980 1,070
Allentown 11K $2.52 780 1,840 1,150
2008 Shipments From Atlanta Grid Coordinates
TO CWT Horizontal Vertical
Chattanooga 2,700 1,350 650
Atlanta 3,500 1,400 600
Tampa 4,300 1,570 220
Birmingham 2,800 1,260 580
Miami 5,300 1,740 90
Jacksonville 5,100 1,600 450
Columbia 2,200 1,600 650
Charlotte 2,900 1,590 740
Raleigh/Durham 2,200 1,700 800
The transportation department also determined that total freight expenditures from the Atlanta distribution center during 2007 were $217,000 and that the average shipment distance was 330 miles.
Case problems:
1. Based on the available information, is Atlanta the best location for a distribution center to serve the southeastern region? If not, what would you recommend?
2. The Fireside transportation department projects a 25 percent rate increase in 2010 from all of its transportation providers. How will this affect the southeastern location?
3. Marketing anticipates that the Raleigh/Durham market will grow by 3,000 cwt. in 2011, and that Fireside will serve the growth from Allentown. How will this affect Atlanta as a location?