Selecting a European Distribution Center Site for American International Automotive Industries

Selecting a European Distribution Center Site for American International Automotive Industries

A Case on Location Selection

Table of Contents

I. Point of View 2

II. Synopsis 2

III. Statement of the Problem 2

IV. Decision Criteria for Alternatives 3

V. Recommendations 3

VI. Contingency Plan 3

I. Point of View

The point of view used in this case is the Vice-President (VP) for taking the initiative to instruct Hamburg office to conduct a preliminary site search. Also, through further studying the five (5) potential sites, the VP can recommend the best location to be considered by the Top Management of American International Automotive Industries (AIAI).

II. Synopsis

The AIAI, a manufacturer of auto & truck engine, transmission and chassis parts, was displeased in their large warehouse/distribution centers at Hamburg and Gdansk in Europe due to the recent incidents of late deliveries and mishandling of products. Also, the AIAI doesn’t have issues previously until in the last three (3) years when the European business market has expanded resulting to more competition and demanding quality-conscious customers.

This resulted to the initiative of AIAI to seek for a new European warehouse/distribution center to maintain its seven (7) major customers (auto and truck manufacturers) in Leipzig, Prague, Krakow, Munich, Frankfurt, especially in Vienna and Budpest which require continuous replenishment of parts and materials.

The VP for construction and development in Dayton, Ohio asked the European headquarters in Hamburg to do a preliminary site search in terms of location, geography, transportation, proximity to customers, and costs. The Hamburg Office was able to identify and forward the respective forecasted number of containers shipped annually for each five (5) potential sites as follows: Vienna (160), Leipzig (100), Budapest (180), Prague (210) Krakow (90), Munich (120) and Frankfurt (50). The Vice-President then studies the information received making reference to the map of Europe.

III. Statement of the Problem

A. Problem Flow Diagram

EUROPEAN BUSINESS EXPANDED New competion and customers