Fowler Distributing
Company
Proposal
Consultants: Anthony Vatterott,
Brian Vincenz, Tiffany Bowen
Background Information
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Fowler Distributing Company
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Beer and wine distributor
5 vehicles available for use
Vehicle capacity = 500 cases of beer
Distributing from local warehouse to 21
different “pre-sell accounts” located 1 to 35
miles from the warehouse
Various time window challenges to meet
Find less expensive, more efficient way to
meet customer’s delivery needs
Current Routes - Summary
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Baseline cost $216,180 per year
Five routes
Overtime cost - $295 per year
Time windows met
Some inefficiencies
Before
After
Improved Routes - Summary
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Baseline cost $188,652 per year
Time windows met
Five routes
No overtime
Savings of $110.11 per day
Annual savings of $27,527 (12.7%)!
Savings With Larger Trucks?
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Option to replace some or all 500 case
capacity trucks with 800 case capacity
trucks
30¢ more per mile ($1.50 vs. $1.20)
Solution: No combination of 800 and 500
trucks gives a better solution.
Use Larger Vehicles
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Best route using one or more 800
capacity trucks.
Cost: $195,793/ year
FOUR routes
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Three 800 capacity
 One 500 capacity
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Annual cost
increase: $7,140
Cash Flow with Larger Trucks
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Sell 4 used 500 case capacity trucks
+ $10,000 each = $40,000
Buy 3 new 800 case capacity trucks
- $ 3,523 each = $10,568
Maximum cost per truck to break even
after 4 years
$10,568 for three trucks is not realistic
Rising Fuel Costs
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If fuel costs increase more than 80¢ per mile, 800
capacity trucks become more cost-effective.
$1,100
Daily Fuel Cost
$1,050
$1,000
$950
$900
$850
$800
$750
$700
$0.10
$0.20
$0.60
$0.80
$1.00
Increase in Fuel Cost per Mile
500 capacity trucks
800 capacity trucks
Without time windows
With time windows
No Time Windows - Summary
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Cost $187,985 per year
Five routes
No overtime cost
Removed time windows – affects 2
customers
Time windows cost Fowler $667 per year
Time Windows – Ranked List
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Rank
Customer(s)
Time Window
1
12 & 7
8:00am – 8:30am
2
13
8:00am – 10:30am
3
10
8:00am – 10:45am
These customers’ time windows have the
greatest impact on costs.
Financial Incentive Options
Option # 1
Cust
Current Time
Window
Time
Change
12
8:00am –
8:30am
6:45am –
8:00am
7
8:00am –
8:30am
Option # 2
Annual
Incentive
Time
Change
Annual
Incentive
$300
1:00pm –
2:00 pm
$300
No change
-
11:00 –
12:30pm
$300
13
8:00am –
10:30am
No change
-
No change
-
10
8:00am –
10:45am
10:45am –
12:30pm
$300
No change
-
Financial Incentives - Summary
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Very small incentive
Difficult to get customers to agree to the
changes
Annual savings for Fowler after incentives
is only $67.50
Is saving $667 per year worth asking
customers to consider other delivery
times?
Key Issues
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Change warehouse location.
Address union fringe benefits.
The cost of fuel is always unknown, so
this is a variable risk.
Adjust warehouse working hours.
Utilize one or two smaller trucks to save
fuel expenses.
Our Proposal
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Adjust the routes to optimal solution
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$188,652 per year
 Use 500-capacity trucks
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Saves Fowler $27,527 per year
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All time windows met
 No overtime costs
 No additional vehicle purchases
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Do not offer incentives for adjusting time
windows since savings is insignificant.