The uncertainness in demand is reflected in the reorder point and safety stock. The more the variableness in demand the higher will be the reorder point and the safety stock. A higher divergence in demand would straight impact the safety stock degrees required at the warehouses and hence addition the stock list carrying costs. This addition would so impact the overall costs. Using our excel theoretical account. If we increase the standard divergence of one-year demand from 10. 000 to 32. 000. the overall costs for Rotterdam become higher than those of Zaragoza. Similarly. changing the service life has an impact on the entire cost as it controls the safety stock which in bend controls the stock list keeping cost. Hence. as the service life increases to a higher value the cost of option 2 ( Zaragoza ) will be lesser than option 1. Cost of the merchandise
As the cost of the merchandise increases the stock list keeping cost additions increasing the entire cost. So Zaragoza as has a better cost advantage over Rotterdam option. In our excel theoretical account. stop uping a merchandise cost of 295 Euros ( E 47 and F 47 cells ) . maintaining all other parametric quantities unchanged makes Zaragoza a better cost option. So it is a factor to be considered.
Based on our above analysis. we recommend the following to the CEO of Zaragoza Logistics Park ( Who should they seek to sell their idea/option ) Zaragoza should aim clients with high figure of units/TEU They should aim clients with high merchandise costs
They should aim clients whose demand uncertainness is high They should aim clients with high one-year demand rates
They should aim clients who have penchant for high service rates Plaza is besides an educational centre for logistics while Rotterdam is a merely a logistics park. Zaragoza should seek to educate the client about the supply concatenation benefits of tie ining with a universe category logistics research centre Plaza is a authorities backed house – they should utilize this factor to transfuse more assurance in the client over a private house like Rotterdam option