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Grocery Gateway Questions

1. The document outlines questions for analyzing Grocery Gateway's supply chain strategy, capabilities, costs savings from increasing delivery stops per hour, and the pros and cons of options suggested by Dominique. 2. It also discusses analyzing Grocery Gateway's business model sustainability by considering fleet size based on demand distributions, deciding on service areas and demand levels, scaling effects on demand and fleet size, and impacts of profit margin changes and meeting delivery windows. 3. Additional data is provided on plant depreciation, truck costs, shifts, and variable costs to help answer questions about analyzing the business model.

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Pankaj Rai
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Download as PDF, TXT or read online on Scribd
718 views

Grocery Gateway Questions

1. The document outlines questions for analyzing Grocery Gateway's supply chain strategy, capabilities, costs savings from increasing delivery stops per hour, and the pros and cons of options suggested by Dominique. 2. It also discusses analyzing Grocery Gateway's business model sustainability by considering fleet size based on demand distributions, deciding on service areas and demand levels, scaling effects on demand and fleet size, and impacts of profit margin changes and meeting delivery windows. 3. Additional data is provided on plant depreciation, truck costs, shifts, and variable costs to help answer questions about analyzing the business model.

Uploaded by

Pankaj Rai
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Grocery Gateway (Ivey 902D03): Questions to consider for analysis.

1. What is the supply chain strategy of the firm? What capabilities must the firm develop?
2. How much money, on average, can Grocery Gateway save by increasing the number of stops per
hour from 2.7 to 4 at the current demand volumes?
3. What are the pros and cons of the 3 options suggested by Dominique?
4. Is the business model sustainable?
a. How should Grocery Gateway think about its fleet-size? Make any suitable assumptions
about demand distributions.
b. How should Grocery Gateway decide on which geographic areas to serve? How much
demand to serve in each area?
c. What happens as demand scales up? Does Grocery Gateway have enough number of
trucks? How should it decide on an appropriate fleet size?
d. What happens if profit margins fall/increase?
e. What are potential issues of meeting delivery time windows?
To answer parts of question 4 consider the following additional data.
Suppose the new plant depreciates over 20 years with a salvage value of $1 Million. Further suppose a
truck costs $50,000 and has a useful life of 5 years with no salvage at the end of 5 years. Let us consider
the case when the trucks operate for 2 shifts (7 hrs delivering orders + 1.5 hours of stem time and set-up
time) in the day, and the average daily demand in each geography is equally split across these 2 shifts.
Let the variable cost/order (COGS as percentage of the average revenue not including distribution
costs) be 85% and the variable cost/hour/truck be $30. Assume there are 360 working days in the year.

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