Subject: loading dock area decision
As I indicated, I have the information you need to analyze the loading dock decision. We have obtained quotes from different companies for the two possibilities. The information from these quotes is summarized in this Word doc [QuotesSummaryInfo]. You will find the investment costs for each option and an estimate of the service (unloading) times for each one.
The first option is for an automated conveyor system that can be extended into the back of a delivery truck. The products are place directly on the conveyor and moved into the warehouse. This will be a single server situation, but should considerably speed up the process. However, note that there are operating and maintenance costs for this piece of equipment.
The second option is to make construction changes to the dock and expand it so that there is room for two unloading stations. We expect that we will continue to use the current unloading process, but this will provide the two-server option.
Analyze this data and determine which option is the best for EBBD. Consider two scenarios, one with no increase in deliveries (flat sales) from our vendors, and the other with a 3% annual growth, which will increase the number of possible daily vendor deliveries. As a reminder, we still consider the current average daily vendor deliveries to be at 28 per day.
We are looking for a clear and concise report that provides your conclusions and recommendations with a good explanation.
Let me know if you have any questions.
~DW, VP LogOps.
Use what you have learned from the Background section. Develop the costs equations for each option and determine the breakeven point for the options. Use the current delivery situation and the forecast to determine which options are best. Write a clear report that provides what Wilco is looking for. Include explanation of your calculations.
TIP: The use of Breakeven Analysis is straightforward. What is tricky in this problem is determining the Fixed Costs and Variable Costs. For the variable costs, you need to determine the unloading time for each alternative and apply the labor cost/hr. And make sure you include all of the variable costs for each alternative. The fixed costs should include all annual fixed costs. Remember that you are looking at the time period of a year so that you can determine the annual breakeven quantity.
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