Darby Case Study

I. Problem Description

The Darby Company is re-evaluating its current production and distribution system in order to determine whether it is cost-effective or if a different approach should be considered. The company produces meters that measure the consumption of electrical power. Currently, they produce these meters are two locations – El Paso, Texas and San Bernardino, California. The San Bernardino plant is newer, and therefore the technology is more effective, meaning that their cost per unit is $10.00, while the El Paso plant produces at $10.50. However, the El Paso plant has a higher capacity at 30,000 to San Bernardino’s 20,000. Once manufactured, the meters are sent to one of three distribution centers – Ft. Worth, Texas, Santa Fe, New Mexico and Las Vegas. Due to the proximity of El Paso to Ft. Worth, they are only plant to ship to Ft. Worth. The costs associated with each shipment are described in detail in Appendix 2.2A. From these distribution centers, meters are shipped to one of nine customer zones. The Ft. Worth center services Dallas, San Antonio, Wichita and Kansas City, the Santa Fe center services Denver, Salt Lake City, and Phoenix, and the