Spartan Plastics Elise Lovejoy the new logistics coordinator

Spartan Plastics Elise Lovejoy, the new logistics coordinator at Spartan Plastics, was looking at the stack of papers and the two Spartan Plastics-Background Information computer screens in front of her. It was Friday afternoon Spartan Plastics was a medium-sized producer of high- the Friday before the long weekend-and she still had not quality. highly engineered plastic components. These com- come to a resolution. She knew that first thing Tuesday morning she would have a meeting with Bob Barley, CEO and major owner of Spartan Plastics. The issue that they would be discussing: how to get the increasing shipping costs under control. With the forecasts for the upcoming ponents were typically found on the interior of most trucks and cars. They tended to come in variety of colors and finishes-everything from small door panels to panels that looked like wood. Typically, their critical major custom- ers consisted of the Big Three (General Motors, Ford, and year looking promising, shipping volumes were expected Chrysler) and were located in the Detroit-Toledo-Lansing to increase by 10 to 25 percent. Consequently, th e shipping area. During the last year, Spartan Plastics had shipped costs had to be addressed because, simply put, they were too high. approximately 10,000 pounds of components per day to each assembly plant served.

Solution

Answer -

1. Calculating the cost implications of each delivery option -

The given firm is supplying products to four plants namely Lansing (487 miles from St. Louis), Detroit (552 miles from St. Louis), Toledo (499 miles from St. Louis) and Ypsilanti (521 miles from St. Louis).

Cost of Current Plan –

Total cost of current plan is $10,295

a) Calculation of cost of Consolidated Shipping (CS)

For this option per mile shipping charge is $6 per mile plus a stop charge of $250 per stop is applicable

Total cost of CS = $7,966

b) Calculation of cost of Amalgamated Shipping (AIS)

For this option per mile shipping charge is $ 6 per mile to the cross dock facility and then a flat cost delivery of $500 to each assembly plant from Yspilanti

Total cost of AIS = $4,626

2. What are the qualitative and service characteristics of each delivery option?

Qualitative and Service Characteristics

3. Based on your analysis, what would you recommend to Bob Barley?

Recommendation to Bob –

When compared the financial as well as quality service based implication the Amalgamated Integrated Services (AIS) provides a better plan. Here, the cost is also less plus, docking facility and equal time for customers is available.

Hence, AIS services are preferred.

Sl.No.	A	B	C	D	E	F = C*D*E
	Source	Delivery Destination	Distance(miles)	Shipment size	Carrier charge	Cost of Shipment
1	St. Louis	Lansing	487	10000	0.05 / 100 = 0.0005	2435
2	St. Louis	Detroit	552	10000	0.05 / 100 = 0.0005	2760
3	St. Louis	Toledo	499	10000	0.05 / 100 = 0.0005	2495
4	St. Louis	Ypsilanti	521	10000	0.05 / 100 = 0.0005	2605
		Total cost				10295