OPS MGMT - American International Automotive Industries (AIAI)

American International Automotive Industries (AIAI) manufactures auto and truck engine,
transmission, and chassis parts for manufacturers and repair companies in the United States,
South America, Canada, Mexico, Asia, and Europe. The company transports to its foreign
markets by container ships. To serve its customers in South America and Asia, AIAI has large
warehouse/distribution centers. In Europe it ships into Hamburg and Gdansk, where it has
contracted with independent distribution companies to deliver its products to customers
throughout Europe. However, AIAI has been displeased with a recent history of late deliveries
and rough handling of its products. For a time AIAI was not overly concerned since its European
market wasn't too big and its European customers didn't complain. In addition, it had more
pressing supply chain problems elsewhere. In the past five years, since trade barriers have
fallen in Europe and Eastern European markets have opened up, its Europeans business has
expanded, as has new competition, and its customers have become more demanding and
quality conscious. As a result, AIAI has initiated the process to select a site for a new European
warehouse/distribution center. Although it provides parts to a number of smaller truck and auto
maintenance and service centers in Europe, it has seven major customersauto and truck
manufacturersin Vienna, Leipzig, Budapest, Prague, Krakow, Munich, and Frankfurt. Its
customers in Vienna and Budapest have adopted manufacturing processes requiring
continuous replenishment of parts and materials.
AIAI's European headquarters is in Hamburg. The vice-president for construction and
development in Dayton, Ohio, has asked the Hamburg office to do a preliminary site search
based on location, geography, transportation, proximity to customers, and costs. The Hamburg
office has identified five potential sites in Dresden, Lodz, Hamburg, Gdansk, and Frankfurt. The
Hamburg office has forwarded information about each of these sites to corporate headquarters,
including forecasts of the number of containers shipped annually to each customer as follows:
Vienna, 160; Leipzig, 100; Budapest, 180; Prague, 210; Krakow, 90; Munich, 120; and
Frankfurt, 50. When the vice-president of construction in Dayton received this information, he
pulled out his map of Europe and began to study the sites.
Assist AIAI with its site selection process in Europe. Recommend a site form the five
possibilities, and indicate what other location factors you might consider in the selection
process.
Scenario: You are an independent consultant, hired by the Vice President of Construction,
American International Automotive Industries (AIAI). Conduct an appropriate quantitative
analysis and provide the vice president with a decision support paper addressing the
issues within the Case Problem.
Specific guidance: You are expected to use the quantitative analysis methods within this
module to arrive at conclusions and provide supported recommendations within your
formal paper. You should select appropriate graphical presentation methodologies to
present this material within the paper. Include all computation materials as appendices to
the completed report.