14 Aug logistic
Grocery Gateway (see case study) did not succeed with the business model described in the case. Consider these possible remedies: • Have two DCs in the GTA (Greater Toronto Area), rather than one. • Instead of DC-customer deliveries, pick and deliver orders from retail grocery stores (that also serve walk-in customers). Grocery Gateway did not actually have any retail stores, but it is still worth contemplating this option in terms of the key “factors”, since Grocery Gateway could acquire local retail stores and/or partner with someone and/or get out of the grocery-delivery business if it looks like their DC-customer model is inferior to store-delivery. Note that a storedelivery model would still require a DC of some kind, like it always has, but there would be no direct DC-to-consumer deliveries, the deliveries would all be store-to-consumer or customer walk-in). Question: For each of the two options, compare them to the current distribution network design (one DC with DCcustomer deliveries) in terms of the key factors that we have studied (response time, inventory (safety stock), product availability and variety, transportation costs, and facility costs). Although you will discuss all of these factors, you should also explain which of them would probably have the biggest impact, in this context, and whether you think that the strategy would have long-term success or not and why (in terms of the factors). Advice: • Your answer should be about 1-2 pages and neatly formatted, but quality matters much more than quantity – take the time to develop and then refine your answer so that it gets to the heart of the matter and is succinct. • Point form and/or table form (neatly formatted) for parts of your answer are fine. • Be sure that you are informed – to some degree, anybody could discuss the pros and cons of the proposed strategies, but we should be able to go deeper after we have studied the key factors for distribution network design. You should be demonstrating a solid understanding of the key factors, the ability to apply them to a specific context, and the ability to put your thoughts into your own words. (It is not expected that you will need to do any further research, beyond our classroom discussions and the posted readings.)
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