Port Logistic Solutions

1. Port Logistic Solutions Group Project Spring ‘06

2. Instructions • Assign distribution centers to ports to minimize cost • Can use a maximum of 3 ports • No port used can process less than 175 cars • Each dealership must get all of its cars from a single port

3. Background • In 2000 Porsche Cars NA realized its current port strategy was insufficient to handle the increased volumes associated with the upcoming SUV introduction. • Had to find a way to bring 40,000 cars from Germany to over 200 dealers around the United States and Canada

4. Background • Ocean shipping was contracted with a RORO shipping line. Costs varied by delivery port. • Port Processing was also outsourced and those costs varied by port. • Trucking costs were only impacted by mileage subject to a minimum fee.

5. Data • Mileage was collected from every RORO port to all 200+ dealers. • Expected dealer volumes were projected for several years and adjusted for seasonality. • Shipping schedules and volume constraints were considered.

6. Costs • Costs break down into two categories. • Ocean freight + Port Processing • Trucking Min of ($50,mileage*0.52) • This sum of these two costs are the total vehicle destination cost. • Total cost to dealer is the vehicle destination cost multiplied by the volume.

7. Lowest Cost Solution

8. Lowest Cost Solution

9. Lowest Cost Solution Albany, - 132 units from New York Atlanta, - 86 units from Jacksonville Miami, - 148 units from Jacksonville St. Louis – 57 units from New York Dallas, - 74 units from Jacksonville Denver, - 43 units from San Diego Los Angeles, - 189 units from San Diego Seattle, - 91 units from San Diego

10. Solution • Three ports used. • New York, 189 units • Jacksonville, 308 units • San Diego, 323 units • Total Cost $815,442 • Total Cost per car $994.44

11. What If • Assignments were re-run for four scenarios of trucking costs changes. • All scenarios the best port assignment did NOT change. • Costs are shown on addition excel tabs.