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Section I: Introduction (200 words)
In general, what are the qualitative pros and cons for domestic sales of having multiple distribution centers and shipping locations in the United States?
Section II: Decision-Making Criteria (300 words)
The CEO is considering three options with the same total construction and operating costs:
expanding the warehouse next to the East Coast manufacturing plant;
building a West Coast distribution center; or
building a combination manufacturing and warehouse location on the West coast
Identify 5 criteria that must be considered when locating a new or expanded shipping warehouse domestically, given this general information:
The products are primarily medium- and large-size insulated coolers, like you might use for a picnic or trip to the beach. Transportation firms charge by space, or cubic feet, rather than weight, which is the more normal method.
The coolers are made of 3 components, which are all produced by suppliers solely on the East Coast; the raw materials to make this product are bulky, and inbound shipping from the East Coast suppliers currently represents 20% of total raw material costs.
The market is very competitive with generally stable or decreasing marketplace prices.
In states that are warm year-round, sales are pretty steady; in states that have seasons, 90% of sales occur in the May-August period.
Right now, to keep West Coast customers happy, the CEO says that they only charge those customers the local freight cost of shipping, which is $200 for anything up to half a truckload.