AMAZON CASE

Executive Summary
Group A
Tamanna Chauhan
Risa Mori
Santino Campos
01
Business
overview
Amazon
Amazon sells online thousands of
products of almost any kind (clothes,
books, jewels, toys, music, apparels,
computers,… 200 million references in
total) all over the world via its website.
Its worldwide turnover was 136 billion
USD in 2016. More than 300,000
employees had full-time or part-time
contracts with AMAZON in 2016.
02
Current
Problem
As for any e-commerce and digital business, and particularly for AMAZON which aims at
gaining market shares over the traditional distribution business, the Supply Chain is a key
issue. The current problem is that many FCs are full because of a very high growth of
demand. The company has set measures to limit the inventories of their suppliers but the
main response to that problem is to expand the network capacity.
We review the 2015 FC network of a part of Southern Europe composed of France, Italy,
Switzerland, Spain and Portugal. There are currently 6 FCs in this region: Madrid (Spain),
Montélimar, Orléans, Châlon-sur-Saône and Lille (France), and Piacenza (Italy) with various
capacities.

Given market increase

forecasts over the next 5
years and investment
capabilities, AMAZON has
decided to extend its FC
network in this region.
03
OPTIONS
Given market increase forecasts over the next 5
years and investment capabilities, AMAZON has
decided to extend its FC network in this region.
 Options
Option 1 Option II
To construct new FCs, in Barcelona, And/or, to extend the
Bordeaux or Rome (the capacity would be capacity of existing
100 000 orders per year for each selected FCs (by 80 000 orders)
location)
 Executive Summary

1.Which FCs would you build and/or extend with multi-source supplying?
Basis the excel file- Amazon Case, we take the decision to extend the Madrid FC while
building a new FC in Bordreaux. This is because Linear Programming analysis shows us that
this result gives us a minimized delivery time of 5,22 hours per order.

2.Which FCs would you build and/or extend with single-source supplying ?
Basis the excel file- Amazon Case, we take, we would take the same extension/construction
decisions. However, we get a different minimized delivery time of 5,94 hours per order.
04
What If Analysis
Basis the excel file, tab Multi source alternate scenario
Assuming Lille suffers from city wide riots
that A) cut the FC capacity to 40000
orders while also increasing demand to
25000 orders (presumably from
consumers wishing to order items
without risking going outside given the
riots), our solver solution calls for
extending the Montelimar FC in
addition or extending the Madrid FC
and building the Bordeaux FC.