Contents

• The paper answers the following questions on the case study –
• 1. What are the costs and benefits of Merloni’s current distribution system? Of a
• transit-point distribution system? Assume that the total costs consist of operating,
• inventory, short- and long-haul transportation costs. How does the proposal
• impact each of these costs?
• 2. Should Merloni replace its network of regional warehouses with transit points?
• If so, what contingency plans and support systems are necessary to support the
• new logistics network? If not, what changes, if any, would you recommend
• Merloni make to its distribution system?

Description

Merloni Elettrodomestici SPA (Merloni) founded in 1930 is a major Italian manufacturer of high quality domestic appliances –of the ‘free-standing’ and ‘built-in’ varieties, both in Italy and throughout Europe. Currently, Merloni has a three tier distribution system based upon the following network:
• 1 central warehouse (near Fabriono in Central Italy),
• 17 regional warehouses
• 5 plant warehouses (one based at each manufacturing plant) – used to store raw materials and WIP in addition to the finished goods corresponding to the one product line which the associated plant manufactures
With this network of warehouses, finished goods are moved from plant warehouses to the central warehouse. From the central warehouse, products are sent to customers through two channels. The first channel involves customers ordering full-truckloads of products which would get delivered directly to them from the central warehouse at a discounted price and with a shorter lead time. Alternately, for smaller orders, customers order with their regional warehouses, which in turn accumulate the orders across all products and have them delivered from the central warehouse to the regional warehouse premises before either shipping them to customer premises or having customers pick them up directly from the warehouse.