According to my analysis as well as the information supplied, the distribution system includes items passing through Los Angeles on their way to the main distribution hub in Kansas, where they are then disseminated to certain other facilities, including in Los Angeles where the goods initially passed through. This incurs additional expenses that could be prevented by converting the warehouse in Los Angeles to a distribution hub so that when the products are delivered at the distribution hub, the volume (requirement) required there is eliminated, as well as the remaining quantity is being sent to the primary distribution hub in Kansas City, from which it is divided up to other warehouses.
The addition of a new distribution center in Los Angeles has several advantages for the company, including reducing the time required to relocate goods from Los Angeles to Kansas and then transferring the amount requested at Los Angeles (18 percent) from Kansas, as well as the expenses incurred during public transportation, which total $466,863.
Similarly, constructing a new distribution warehouse in Los Angeles would allow all shipments into the state to be accepted there, saving $155,952 in needless transportation expenses from the Seattle facility.
The Seattle site might then be leased as well as sold to avoid excessive expenditures associated with maintaining this warehouse. This will boost the profitability of the company even more by removing costs that can be eliminated. As a result, the completely new savings will be $622.815, while the new payback time will be 2.41 years.
