Case 8
Western Pharmaceuticals (A)

Overview
Western Pharmaceuticals (A) is a supply chain network design case placed in the setting of a merger of two firms, Western Pharmaceutical and Atlantic Medical. While their product lines don’t overlap, there is definite overlap in their distribution systems. Both the demand and cost data is provided in spreadsheets to facilitate a total cost analysis. This case provides students with a comprehensive and realistic distribution center location problem that can be solved using a spreadsheet analysis.
While the analysis can be completed using a supply chain design planning tool such as
CAPS, Supply Chain Planner, Supply Chain Navigator, or Logic*Net, it is often useful to have the students completed the analysis using a spreadsheet so they develop some insight regarding the logic and dynamics of such planning tools. This case can also be used to illustrate and apply the Logistics Planning Process discussed in Chapter 16.
This case is an effective tool for students understand the process of developing a total cost model and then using it to determine relevant total cost curves includes the major logistics cost components. Solution
The first step in solving the case is to define the critical assumptions for completing analysis. Specific assumptions include:
1. All demand is assigned to a single point within each state. A representative point is the capitol or the largest city;
2. All demand is shipped to customers in either less-than-truckload (LTL) or truckload (TL) volumes and each state receives a combination of both;
3. Service level is measured as the percent of volume within 750 miles of distribution centers.
In effect the demand point in each state for 95 percent of the total volume must be within
750 miles of the servicing distribution center;
4. The analysis scope includes movements from