Question

our eyeglass frame-making firm is considering one of two distribution alternatives. The first is to make all shipments from your Chicago plant to one of three regional warehouses located in Philadelphia, Chicago, and Reno. All orders from eyeglass page 108retailers would be shipped from these sites. The second alternative is to create one warehouse in Memphis, Tennessee, and ship all orders via Federal Express. Prepare a process flow diagram of each alternative. What additional information would you need to ascertain which alternative will provide the best value to your customers? Is this different from a lower cost solution? Why?

Answer 1

To determine the best distribution strategy for an eyeglass frame-making firm, process flow diagrams for each alternative should be made, and additional information on transportation and warehousing costs, among others, should be acquired. Considering customer value beyond just cost includes assessing delivery speed and service, alongside strategies demonstrated by companies like Amazon and American car manufacturers.

Step-by-step explanation:

When determining the best distribution alternative for an eyeglass frame-making firm, two alternatives are considered: multiple regional warehouses or a single warehouse using Federal Express for distribution. To compare these, one would need to prepare a process flow diagram for each alternative.

Additional information that would be required includes transportation costs, warehousing costs, possible delays in delivery from regional hubs versus a central hub, customer service impact, and the ability of each alternative to scale with the company's growth. Locations near uncrowded freeways, rail, or water transport can significantly lower transport costs, according to Weber's Location Model. Additionally, factors like economies of scale, highlighted by Amazon's warehouse strategy, and the just-in-time delivery strategy adopted by American car manufacturers can affect the cost and efficiency.

The best value to customers may differ from the lowest cost solution due to factors such as delivery speed, reliability, and customer service. Assessing these will help to determine which distribution strategy aligns best with customer expectations and the firm's operational goals.