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Optimizing Warehouse and Transportation Solutions for Karnataka Engineering Company, Assignments of Supply Management

XLRI - Xavier School of ManagementSupply Management

Insights into the Karnataka Engineering Company's (KEC) operations in the 2-wheeler industry, focusing on the number of warehouses to be selected, their locations, and shipment capacity. The document also discusses the allocation system for products to other branches and the selection of routes to meet demand constraints. a transporter code table and the multicog method to determine the optimum number of warehouses, which is three. The recommended locations are near Hyderabad, Vijayawada, and Cuddapah.

Typology: Assignments

2020/2021

Uploaded on 03/25/2021

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Karnataka Engineering Company is in Raichur, India. It had entered 2-wheeler industry in 1981starting
with mopeds. It had started production of scooters in 1983. Overall in India, it has 19 branches. The
minimum throughput that would justify setting up of a branch in any state would be 4.25 lakh per month
(78 Mopeds or 33 Scooters per month or any other combination). Marketing offices are located in 14
states overall in India. In Andhra Pradesh, they are situated in 22 locations. We have divided the locations
in Andhra Pradesh as Northern AP & Southern AP. Mopeds and Scooter are transported by a specially
adapted truck with a capacity of either 80Mopeds or 50 Scooters or a combination of both. Secondary
transportation is arranged by marketing offices by LCVs or trucks
Case Facts
Sales from Jan-Jul’1998 are 465 mopeds and 78 scooters in Andhra Pradesh between the
time frame of Jan-Jul’98 have contributed around 5.3% of KEC’s,total mopes sales &
Scooter sales of 3.6%
Average monthly off take in AP during Jan-Jul’1998 are 1925 mopeds and 288 scooters
The current rate of tax: 4% CST
Current sales in AP Rs.14.33/- million per annum. At this rate the money outflow to
exchequer is Rs.573260/- ; Cost for setting up one branch isRs.17000/- to Rs.21000/-
p/m, i.e., Rs20,4000/- to Rs.252000/- per annum. So, 2 branches can be set up in the state
at the current rate of tax and sales issues.
Main Issues in Karnataka Case
How many warehouses should be selected?
Deciding on the warehouses’ location
Shipment capacity for each warehouse
Allocation system for products to other branches
Selection of the routes from the warehouses to meet their demand constraints and to address the
order processing system.
Approach
Transporte
r Code
Transporter Truck Rates (Rs Per Km)
80 Mopeds/50
Scooters
56 Moped/35
Scooters
20 Moped/12
Scooters
T-1 PC Rao Brothers 6 4.8
T-2 Raichur Roadways 6 4.8
T-3 Adoni Travels 6.5 5 4
T-4 Mehboobnagar Trucking Society 6.9 5.5 4.6
Qty Rate/Km Transporter code Trucks Needed Truck Capacity
<=20 4 T-3 1 20
21-56 4.8 T-2* 1 56
pf3
pf4
pf5
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pf9

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Download Optimizing Warehouse and Transportation Solutions for Karnataka Engineering Company and more Assignments Supply Management in PDF only on Docsity!

Karnataka Engineering Company is in Raichur, India. It had entered 2-wheeler industry in 1981starting with mopeds. It had started production of scooters in 1983. Overall in India, it has 19 branches. The minimum throughput that would justify setting up of a branch in any state would be 4.25 lakh per month (78 Mopeds or 33 Scooters per month or any other combination). Marketing offices are located in 14 states overall in India. In Andhra Pradesh, they are situated in 22 locations. We have divided the locations in Andhra Pradesh as Northern AP & Southern AP. Mopeds and Scooter are transported by a specially adapted truck with a capacity of either 80Mopeds or 50 Scooters or a combination of both. Secondary transportation is arranged by marketing offices by LCVs or trucks Case Facts

 Sales from Jan-Jul’1998 are 465 mopeds and 78 scooters in Andhra Pradesh between the

time frame of Jan-Jul’98 have contributed around 5.3% of KEC’s,total mopes sales &

Scooter sales of 3.6%

 Average monthly off take in AP during Jan-Jul’1998 are 1925 mopeds and 288 scooters

 The current rate of tax: 4% CST

 Current sales in AP Rs.14.33/- million per annum. At this rate the money outflow to

exchequer is Rs.573260/- ; Cost for setting up one branch isRs.17000/- to Rs.21000/-

p/m, i.e., Rs20,4000/- to Rs.252000/- per annum. So, 2 branches can be set up in the state

at the current rate of tax and sales issues.

Main Issues in Karnataka Case

 How many warehouses should be selected?

 Deciding on the warehouses’ location

 Shipment capacity for each warehouse

 Allocation system for products to other branches

Selection of the routes from the warehouses to meet their demand constraints and to address the

order processing system.

Approach

Transporte r Code Transporter Truck Rates (Rs Per Km) 80 Mopeds/ Scooters 56 Moped/ Scooters 20 Moped/ Scooters T-1 PC Rao Brothers 6 4. T-2 Raichur Roadways 6 4. T-3 Adoni Travels 6.5 5 4 T-4 Mehboobnagar Trucking Society 6.9 5.5 4. Qty Rate/Km Transporter code Trucks Needed Truck Capacity <=20 4 T-3 1 20 21-56 4.8 T-2* 1 56

*T-1 and T-2 have the same rates, hence there is no difference in selecting one over the other

  • 57-80 6 T-1
  • 81-112 9.6 T.2*
  • 113-136 10.8 T-1,T-2* 1,1 80,
  • 137-160 12 T-1
  • 161-180 16 T-1,T-3 2,1 80,
  • 181-216 16.8 T-1,T-2* 2,1 80,
  • 217-240 18 T-1
  • 241-260 22 T-1,T-3 3,1 80,
  • 261-296 22.8 T-1,T-2* 3,1 80,
  • 297-320 24 T-1
  • 321-340 28 T-1,T-3 4,1 80,
  • 341-376 28.8 T-1,T-2* 4,1 80,
  • 377-400 30 T-1
  • 401-420 34 T-1,T-3 5,1 80,
  • 421-456 34.8 T-1,T-2* 5,1 80,
  • 457-480 36 T-1
  • 481-500 40 T-1,T-3 6,1 80,
  • 501-536 40.8 T-1,T-2* 6,1 80,
  • 537-560 42 T-1
  • 561-580 46 T-1,T-3 7,1 80,
  • 581-616 46.8 T-1,T-2* 7,1 80,
  • 617-640 48 T-1
  • 641-660 52 T-1,T-3 8,1 80,
  • 661-696 52.8 T-1,T-2* 8,1 80,
  • 697-720 54 T-1
  • 721-740 58 T-1,T-3 9,1 80,
  • 741-776 58.8 T-1,T-2* 9,1 80,
  • 777-800 60 T-1
  • 801-820 64 T-1,T-3 10,1 80,
  • 821-856 64.8 T-1,T-2* 10,1 80,
  • 857-880 66 T-1
  • 881-900 70 T-1,T-3 11,1 80,
  • 901-936 70.8 T-1,T-2* 11,1 80,
  • 937-960 72 T-1
  • 961-980 76 T-1,T-3 12,1 80,
  • 981-1016 76.8 T-1,T-2* 12,1 80,
  • 1017-1040 78 T-1
  • 1041-1060 82 T-1,T-3 13,1 80,
  • 1061-1096 82.8 T-1,T-2* 13,1 80,

The Multicog method clearly shows that the optimum number of warehouses is 3. From a location perspective, we see that they are near Hyderabad, Vijayawada and Cuddapah. Planning the transportation, we find that the number of trucks required will be reduced Old New Place Big Mediu m Small Big Mediu m Small Adoni 0 0 0 0 0 0 Anantpur 1 0 0 1 0 0 Chirala 0 1 0 0 1 0 Chittore 1 1 0 1 1 0 Cuddapah 1 0 0 1 0 0 Guntur 1 1 0 1 1 0 Hindupur 1 0 0 1 0 0 Hyderabad 9 0 0 9 0 0 Kakinada 1 0 0 1 0 0 Karimnagar 1 0 0 1 0 0 Khammam 1 1 0 1 1 0 Kurnool 0 1 0 0 1 0 Mehbubnagar 0 0 0 0 0 0 Nellore 0 1 0 0 1 0