Gree Electronics

Gree Electronics is a famous Chinese manufacturer of air conditioners. The company has a single manufacturing facility in Zhuhai, Guangdong. Gree Electronics distributes its products through five regional warehouses located in Chongqing, Hefei, Zhengzhou, Wuhan, and Shijiazhuang. In the current distribution system, China is partitioned into five major markets, each of which is served by a single regional warehouse. Customers, typically retail outlets, receive items directly from the regional warehouse in their market area. That is, in the current distribution system, each customer is assigned to a single market and receives deliveries from one regional warehouse. The warehouses receive items from the manufacturing facility. Typically, it takes about two weeks to satisfy an order placed by any of the regional warehouses. In recent years, Gree has seen a significant increase in competition and huge pressure from their customers to improve service level and reduce costs. To improve service level and reduce costs, Gree would like to consider an alternative distribution strategy in which the five regional warehouses are replaced with a single, central warehouse that will be in charge of all customer orders. (a). Describe how you would design a new logistics network consisting of only a single warehouse.(b). Provide an outline of such an analysis: What are the main steps?(c). Specifically, what data would you need? (d). What are the advantages and disadvantages of the newly suggested distribution strategy relative to the existing distribution strategy?

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