You are chief of staff to the COO of a mid-sized distributor. Four regional warehouses cost ₹31 crore a year to run in total and hold ₹88 crore of inventory. Operations proposes consolidating into two, claiming ₹9 crore of annual savings and a ₹22 crore inventory release. Consolidation would push average delivery distance from 140 km to 265 km; the service promise is next-day. One-time cost is ₹14 crore.
Write a one-page memo to the COO recommending a decision. Lead with the recommendation. Assume they will read the first three lines and nothing else if those three lines are weak.
100 points, 60% to pass.
Recommendation first, then the two or three reasons, then what it depends on. The real question is whether next-day delivery survives 265 km, because a broken service promise costs revenue that does not appear in the ₹9 crore. Payback on ₹14 crore against ₹9 crore is under two years before the inventory release, which is attractive enough that the decision turns on service risk rather than on the arithmetic.