Case Study: Darby Company Distribution System Design Essays

3159 Words Apr 17th, 2011 13 Pages
[Case Study: Darby Company Distribution System Design]

Case Overview

Darby Company, a producer of meters for measuring electric power consumption has expanded its business operations beyond their El Paso Plant in Texas towards the west coast and built a more cost efficient plant in San Bernardino (SanB), California. The firm also opened a third Distribution Centre (DC) Las Vegas to better serve customers in the larger markets zones of California. The current network presents several constraints to the firm to distribute meters at the lowest possible per unit cost as plants have differing production cost levels. In this case a fixed charge for production and transportation cost per unit has been imposed for each link between Plants
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To offset the disadvantage of higher production costs the company might seeks to distribute goods from more locations in proximity to customer areas to improve service quality while reducing transportation costs.

In case that shipping costs are higher on a certain route due to distance or the fact that a smaller transport vehicle has to be used to justify shipment of a smaller quantity currently demanded by a customer, linear programming could assist us in highlighting such a bottle neck problem.

Thirdly the quality of decision making is improved by using this technique as the decisions are fact based and not due to subjective estimation. Furthermore this technique helps to avoid the waste of limited resources.

Some of the Limitations

Linear programming is applicable only to problems where the constraints and objective function are linear i.e., where they can be expressed as equations which represent fixed costs between transport links as straight lines. In real life situations, when constraints or objective functions are not linear, this technique cannot be used.

A number of factors related to uncertainty arising from a changing economic climate, introduction of international government policy to reduce carbon dioxide emission CO2 , increasing customer demands, changes in costs of oil, taxation according to vehicle weight,

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