Internet Case Study for Chapter 9: Layout Strategy

W & G Beer Distributorship

Three recent college graduates have decided to open a beer distributorship together to serve their neighborhood. After a long series of discussions, they decide
to attempt to reach an exclusive arrangement with one of the major beer producers. The successful conclusion of this strategy means that once in business they
will sell only one brand of beer but will control that brand in their small geographic area. The partners have worked with business consultants to obtain financing,
develop an accounting system, and prepare marketing plans.
One of their early decisions was the selection of a building to rent. The building, which measures 120 ft. by 220 ft., is separated into a 50 ft. by 70 ft. office area
and a warehouse. The partners decide to maintain a 20-foot-wide aisle up the middle and to provide for seven storage areas along the aisle, each of which will
measure 50 ft. by 50 ft. The last 20 feet on the side of the building opposite from the office is the loading dock.

Each of the seven products the partners plan to sell will be stored in its own area. In the absence of any inventory analysis, they will keep only the amount of
inventory that will fit into each storage area, regardless of differing levels of sales and different product size (space) requirements.
By establishing dedicated product-storage areas, the three partners hope to
1. Systematize order storing and picking
2. Reduce damage and spoilage
3. Facilitate inventory checking.
An important fourth goal, which to this point the partners have ignored, is reducing the materials handling requirements. By assigning the seven products to certain
storage areas, they can increase or decrease the materials handling requirements.
The following chart shows the estimated monthly sales of the seven products.
Product

Sales

Kegs
Cans (six-packs)

341
1,421

Cans (twelvepacks)

277

Lite (cans)

148

Bottles (sixpacks)

137

Bottles (other)

97

Quarts

76

DISCUSSION QUESTIONS
1. Which product should be stored in which storage area?
2. Now suppose that the three partners decide to make the number of trips to each area from the loading dock, not sales, the measure for reducing materials
handling requirements. After all, each keg sold requires one trip, but as many as twelve six-packs can be carried in one trip-even more if bought by the case. As
a rule, different products are not picked up on the same trip into the warehouse.
The estimated monthly trips into the warehouse for each product follow.
Product

Sales

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Kegs

341

Cans (six-packs)

178

Cans (twelvepacks)

55

Lite (cans)

19

Bottles (sixpacks)

34

Bottles (other)

32

Quarts

25

Would this affect the layout in any way?

3. On further thought, the partners realize that they have been very shortsighted. They have considered only the trips they make when unloading the trucks. One
of the partners suggests that they should minimize the amount of walking and carrying done when they prepare orders for customers. To get an idea of the
customer flow, they look at past records and make a table that shows the number of times that two items appear on the same sales slip.

Kegs
Cans (sixpacks)
Cans
(twelvepacks)
Lite (cans)
Bottles
(sixpacks)
Bottles
(other)
Quarts

Kegs Cans Cans Lite Bottles Bottles Quarts

(six- (twelve- (cans) (six- (other)
packs) packs)
packs)
12
15
100 29
48
3
273

421

98

351

162

130

99

265

88

25

54

8
1

(For example, on twelve of the sales slips, a person had ordered kegs and six-pack cans. Keep in mind that any of the sales slips with a keg and a six-pack of
cans could also have listed other items.)
Given this information, how should the warehouse be laid out?

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