Port Logistic Solutions Group Project Spring ‘06

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

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

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.

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.

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.

Lowest Cost Solution

Albany, units from New York Atlanta, - 86 units from Jacksonville Miami, units from Jacksonville St. Louis – 57 units from New York Dallas, - 74 units from Jacksonville Denver, - 43 units from San Diego Los Angeles, units from San Diego Seattle, - 91 units from San Diego

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

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.