Basil & Co: How Many Distribution Centres?
Operations
hard50 min0 submissionsStripe
Scenario
Basil & Co is a quick service restaurants business in India shipping about 7m orders a year on ₹772 Cr of revenue.
It runs 1 distribution centre today. The supply chain team has proposed moving to 4.
Current economics per order:
- Line-haul: ₹30
- Last-mile: ₹93
- Average delivery time: 5 days
Under the proposed network:
- Each additional DC costs ₹7 Cr a year to run
- Last-mile falls to about ₹71 per order, because stock sits closer to customers
- Average delivery time falls to 4 days
- Marketing estimates faster delivery is worth roughly 1.8% of revenue in additional sales
The CFO is resisting on the grounds that fixed costs go up.
Supporting data
volume
- revenue
- 772
- orders m per year
- 7
derived hints
- added fixed cost
- 21
- revenue lift value
- 13.9
- last mile annual saving
- 15.4
current network
- avg delivery days
- 5
- last mile per order
- 93
- line haul per order
- 30
- distribution centres
- 1
proposed network
- avg delivery days
- 4
- dc fixed cost each
- 7
- last mile per order
- 71
- distribution centres
- 4
- estimated revenue lift pct
- 1.8
Your task
Advise on the network. Your answer should provide:
- Analysis — total cost-to-serve under both networks, computed.
- Risks — what the case depends on and what you would monitor.
- Recommendation — a specific number of DCs and why.
State any assumptions you make.
Ready to move forward? Up next: Basil & Co: Build the Line or Keep Buying?Next question
How you'll be graded
100 points, 60% to pass.
- recommendation20
- service tradeoff25
- problem structuring25
- quantitative analysis30
Hint
Reveal suggested structure
Cost-to-serve build-up; fixed vs variable trade; service level as revenue; marginal DC analysis