CASE STUDIES Fowler Distributing Compa" DELIVERY OPERATIONS [A regular route is an assignment of retail and particular driver and truck is the owner of the Fowler a regional franchised coolers for a large oblem in the effi- and wine prod- fing Company, of beer and wine fy Roy faces a major Pr station of the beer other accounts to a Drivers are unionized and bid for these routes | ‘They win the routes based OF seniority, act aS ‘on the routes, and further develop \ Torre accounts. Roy owns the deliv- salespersons Js, but union route drivers peddle store accounts in order to increase their income. \ by selling beer and wine from the Drivers are paid on @ ‘commission basis and have \ fon the trucks. Drivers are interested een anown to earn as much as 4,000 per week sending — dunpgs Eel SER ‘As might be s Ny expected, drivers jealously guard their route com- ing effort, he is also interested iN positionand design: Rey’ ‘must confront the union. f trucks needed to when. ‘attempting to reconfigure the routes. st of accounts known as g the number o} served on secondary counts and the miles driven sine® “There is another rating expenses are charged [0 the presell accounts that are tether than against a dziver’sincome. routes There is some OP ing the secondary rout aecounts place an order in advance of delivery rather than wait for the route salesperson to drop by. The orders for these accounts can Be pput on trucks separate from those of the com- P ssion accounts and routed a desired without many restrictive union rales. No sales commis- paid, since no selling by he driver takes tomake a living in iver and main Roy would tenance man. To con purchase only one sion is swapping them place. Sout of service. He was P' recy setup its oven transit ste ATYPICAL PROBLEM nce led him to Ona typical day, the 21 pre-sell accounts might Cran as described in Table 1 and located in Figure 1. There are 250 operating days per Year ‘Table 1 gives the number of ca5¢S demanded, {in minutes) to service the ifs transportation experi! fa beer distributorship and to peddle Mmalocal warehouse to the various retail is in the region surrounding the ware- Mrebrewery became a cominant beet the expected time Roy's distributorship hrived as well. account, and Hine of day in which the account es the largest distributor #9 hhisarea, _canbeserved, if restricted. Figure 1 gives aap oasis essential to maintaining Ris sf the location of each account (OY number) and of the warehouse (WW). The map 16 scaled with edge problem by William L- Bern 7 Transport Decisions 277 ChapterAccount NuMBER 120 200 120 150, 50 90 140 60 Table 1 Account Data the approximate number of miles to travel north and south or east and west on the grid. The area’s road network is well developed, and there are no rivers, lakes, or other barriers to take into consideration. Distance and driving time are directly related by an average speed of 25 miles per hour. The company currently has five delivery vehicles to handle the pre-sell accounts and an ample number of drivers for them (warehouse workers often double as pre-sell account dri- vers). Each truck has a capacity of 500 cases, a price of $20,000, and an operating cost of $0.90 per mile, which includes truck depreciation, 278 Part IIT Transport Strategy Cases DewaNDeD __DaLIVERY Tive, MIN, Tie Windows 0 8:00 A.M.-5:00 Pa. 90 8:00 A.M.-10:30 Aa, 60 8:00 A.M-5:00 Pa. 80 8:00 AM-5:00 pat 40 8:00 a.M.-5:00 rat, 50 8:00 A.M.-5:00 PIM. 70 8:00 AM-8:30 Am, 40 8:00 A.M.~5:00 PIM. 60 8:00 A.M.~5:00 PM 90, 8:00 A.M.~10:45 an, 20 SIAM & 247m, 8:00 A.M.-8:30 AM, 8:00 4.M.-10:00 a. 12:30 pa.-5:30 Po, 8:00 A.w.—12:45 PM, 8:00 Ant-5:00 Po, 8:00 A.M~5:00 PM, 8:00 a.m-5:00 PM, 12:00 pM.—4:00 Pa. 8:00 a.m 5:00 pa 8:00 A.vt-5:00 pa _| which includes a 30 percent fringe bent package. ies. Drivers are paid double the standard rat Pay (no fringe benefits) for time on the 10 above eight hours per day, not including lunch break. Roy abhors paying overtime. half hour is allocated on the route for lur which must be taken between 11:30 A.M. anigure 1 lap of Accounts d Warehouse Location Miles of travel NS 15 20 25 Miles of travel EW 30 35 40 x Route Start Time Stop Sequence een specified time windows. Te § rot to make a delivery ata stop before ae oa indow opens or after it closes, but ag ¢ ements are sometimes not met. 3 ee SAG AT BAR 4 8:00 A.M. 11,20,18,21,9 5 7:39 AM. 7,13,10 5. The union is negotiating for a 71/2 hour workday, excluding lunchtime, before Isit fair to compare this design with overtime begins. What implication does ent one? this have for route design and costs? does it cost Roy Fowler to serve the 6, Roy would like to consider a more central fe time windows other than the 8: location for the warehouse at coordinates 5:00 PM. Time windows? Is there any- X = 20, Y = 25. The lease cost for the build- ng that he might do to reduce this cost? ing is the same as the current location, er trucks, priced at $35,000 and hav- but the pre-sell demand portion of the ‘accapacity of 600 cases, are available, one-time moving cost is $15,000. Is such a ould they be purchased? They are move economically attractive for pre-sell fed to increase operating costs by demand? 05 per mile. 7. How would you go about implementing a gy can use an outside transport service computerized software package such as iver to all accounts with demand of 50 ROUTER for truck dispatching on a daily es or less for a price of $35.00 per basis? What problems would you antici- should he do it? pate, and how would you deal with them? Chapter 7 Transport Decisions 279