Project_1_Team_5 REPORT-1

Project_1_Team_5 REPORT-1 - Limman Jeremy Sanders Ryan...

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Limman, Jeremy Suvaroporn, Reasina Project 1 Sanders, Ryan Valdez, Vanessa Group 5 Research To determine the projected sales of the Nintendo DSi over the next six years, our team studied the demand of the Nintendo DS in its first six years on the market. We are only studying sales in the United States, so the numbers should be similar even though the DS was released several years ago. Because we are only concerned with the major cities in the U.S. we focused on six large cities in different regions and estimated that 80% of total DSi sales in the U.S. will be in these cities. We distributed the forecasted demands throughout these six cities proportional to their population size. To calculate distribution costs from each distribution center to each market (C ij ), we first had to the find the distance from each of our six cities to another. Then, we researched the cost of transporting goods in North America. We explored several methods of transportation such as air, train, truck, and barges. The costs were all given to us in \$ per-ton per-mile (A). Therefore, we used the following equation to calculate the cost per million: Cost per million = A * 0.654 kg * Distance The warehouse costs were the most difficult information to find. We decided to find the average rental costs of the cheaper warehouses since this is what we would do if we were actually starting this business. Through extensive research, we were able to determine the rental costs of 1sq-ft annually for a warehouse in each of the cities we chose. We also found out that miscellaneous costs of a warehouse were about \$0.50 per sq-ft so this was added to get the total cost of warehouse rentals. We decided to use a warehouse that is considerably bigger than average warehouses because we wanted to be

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Limman, Jeremy Suvaroporn, Reasina Project 1 Sanders, Ryan Valdez, Vanessa Group 5 able to store up to 3 million units at first. To be more accurate, we did research on the rental costs for each city. We found that the DSi’s dimensions are 23 by 23 by 7 cm. We used these dimensions to find the size of warehouse needed to store up to 3 million units. Methodology We used Network optimization to minimize the total costs involved in distributing the goods. Below is the network optimization model for the problem. Network Optimization Objective: To minimize costs thus maximizing profits. The costs associated with this project are inbound costs, costs of distributing the goods to the market, and fixed costs. Constraints:
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Project_1_Team_5 REPORT-1 - Limman Jeremy Sanders Ryan...

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