Decision-Making Criteria (500-750 words)
The CEO is considering either expanding the warehouse next to the East Coast manufacturing plant; or for the same total construction and operating costs, building a West Coast distribution center; or for the same total construction and operating costs, building a combination manufacturing and warehouse location on the West Coast. As a completely separate issue, she is also considering opening a distribution center overseas, to serve the fast-growing warm weather markets of France and Spain.
Given the following general information, what are at least 10 criteria that must be considered when locating a new or expanded shipping warehouse domestically? Internationally?
The products are primarily medium- and large-size insulated coolers, like you might use for a picnic or trip to the beach. As a result, no matter what mode of shipping is used, 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 market is very competitive with generally stable or decreasing marketplace prices because of this competition.
In states and countries that are warm year-round, sales are pretty steady; in countries and states that have seasons, 90% of sales occur in the May-August period.
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.
Domestic demand is expected to increase 5% annually; international demand is expected to increase 15% annually.
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.
The current exchange rate is 1 euro = $1.50.