Lotus Thread Company Limited (C)

Abstract

This case follows up the case Lotus Thread Company Limited(A) (LTCL-A) by focusing on an important area in the logistical decision making hierarchy. The main issue is that of distribution network design and some of its major consequences. The company, while examining its logistics network has identified three options for their despatches, direct despatches to regions, despatch through a single warehouse (called a Central Warehouse (CWH) or through two CWHs, which would then be located one each in the north and south of India). The case analyses the pros and cons of having a CWH and the reactions are sought of the various company functions (production, quality, and regional managers and logistics managers). This brings out the various interrelated concerns of supply chain management in a direct way. This case also allows one to understand the effect of shipment frequency on buffer stocks and also the effect of combining destinations to get shipments that are more frequent. The case does not explicitly capture the infrastructural (fixed) or the operating costs associated with the CWH, but provides a strong basis for quantifying and analyzing the benefits of having a CWH.