Customization cost min

1000
max 5000 Depending on the amount of work and
customization to be done, customization could cost
Tony Rizzo Points of Sale
less than $1,000 to more than $5,000.
Gary Chicago
Indiana Milwaukee
Minneapolis Detroit In less than four years, Tony Rizzo was able to
expand his small operation in Gary, Indiana, to other
major outlets in Chicago, Milwaukee, Minneapolis
Product Shower-Rific and Detroit.

2 fiberglass gallons
3 labor hour
Shower-Rific was made of fiberglass and contained
Gary 300 Production built-in towel racks, soap dishes and soaps, and a
Supposed unique plastic door. Each Shower-Rific required 2
gallons of fiberglass and 3 hours of labor to
fabricate.

Most of the Shower-Rifics were manufactured in

Fort Wayne Plant 150 Gary in the same warehouse where Custom Vans,
Supposed Inc. was founded. The manufacturing plant in Gary
could produce 300 Fighting Rifics in a month, but
this capacity never seemed to be enough.

This infuriated the manager of Custom Vans in

New Plants Detroit, Michigan
Rockford, Illinois
Madison, Wisconsin Capacity is
equal
Minneapolis, and after many heated discussions,
Tony decided to start another Shower-Rifics
manufacturing plant in Fort Wayne, Indiana. The
manufacturing plant in Fort Wayne could produce
150 shower Rifics per month.

Each plant would have the same capacity as the Fort

Tony
Cost of transportation and demand
to be taken into account
Wayne manufacturing plant. Initial research was
conducted on possible manufacturing locations, and
Tony decided that the two new plants should be
located in Detroit, Michigan; Rockford, Illinois; or
Madison, Wisconsin.

Tony knew that selecting the best location for the

two new manufacturing plants would be difficult.
Transportation costs and the demands of different
locations should be important considerations.
The Chicago store is managed by Bill Burch. Gary's plant supplied him with 200 Rifcs although
the actual demand in Chicago was 300 units. The freight cost from Gary was $10, and although
the freight cost from Front Wayne was $20, Bill Burch always asked that they get an additional
50 units from Fort Wayne. The two additional dua-free manufacturing plants could supply Bill
with the additional 100 units he needed. Now, the cost of transportation from Detroit would be
$30, from Rockford $5 and from Madison about $10.

The Milwaukee store is managed by Wilma Jackson. The manager was very upset because the
demand in Milwaukee was 100 units but she was currently receiving only 50 units from the Fort
Wayne plant. The cost of transportation from Gary was $20, from Fort Wayne it was $30.
Willma was hoping that a new store would open in Madison, so she could meet all her demand,
and the transportation cost would be only $5. There is also the option in Rockford although the
transportation cost would be $10: Finally the transportation cost from Detroit would be about
$40. If a Detroit store were to open, Wilma speculated that she would not get any Detroit units.

The Minneapolis store is managed by Tom Poanski. Gary's plant supplied him with 100 Rifcs
although the actual demand was 150 units. This had the highest costs. The cost of
transportation from Gary was $40 and from Front Wayne was $50. Tom also hoped that a new
plant would not be installed in Detroit as the cost would be $60. Transportation costs from
Rockford and Madison would be $30 and $25 respectively.

The Detroit store is managed by Dick Lopez. The Fort Wayne plant supplied him with 100 Rifcs
although the actual demand was 200 units. The cost of transportation from Fort Wayne was
$15, while the cost of transportation from Gary was $25. The chances of opening a new plant in
Detroit were very high; if this were the case, the transportation cost would be only $5. It could
get 150 showers from the new Detroit plant and the other 50 showers from Fort Wayne. There
is also the option of a plant in Rockford and Madison which would have a transportation cost of
$35 and $40 respectively.
Innovation was the main factor in Tony's success in turning a small store into one of the largest
and most profitable custom van operations in the Middle seemed to have a special ability to
design and develop unique features and devices that van owners always had a high demand for.
One example was Show was developed by Tony just six months after it was developed.
started Custom Vans, Inc. These small showers were completely self-contained and could be
placed in almost any type of van and in different locations within a van.
Most of the Shower-Rifics were manufactured in Gary in the same warehouse where C Inc. was
founded. The manufacturing plant in Gary could produce 300 Shower Rifics in a month, but that
never seemed to be enough. Custom Van stores in all locations were complaining enough
Shower-Rifics, and because Minneapolis was farther away from Gary than the others Tony was
always inclined to ship Shower-Rifics to the other locations before Minneapolis.

The manufacturing plant in Fort Wayne could not yet meet the current demand for Sh Tony
knew that demand for his unique RV shower would grow rapidly in the coming year. After
consulting with his lawyer and banker, Tony concluded that he should open two manufacturing
nu as soon as possible.
 CHICAGO STORE
ADMINISTRATOR Bill Burch
DEMAND 300
ACTIVE SUPPLY 200
TRANSPORTATION COST
GARY 10
FORT WAYNE 20
ROCKFORD 5
MADISON 10

MILWAUKEE STORE
ADMINISTRATOR Wilma Jackson
DEMAND 100
ACTIVE SUPPLY 50
TRANSPORTATION COST
GARY 20
FORT WAYNE 30
ROCKFORD 10
MADISON 5

MINNEAPOLIS STORE
ADMINISTRATOR Tom Poanski
DEMAND 150
ACTIVE SUPPLY 100
TRANSPORTATION COST
GARY 40
FORT WAYNE 50
ROCKFORD 30
MADISON 25

DETROIT STORE
ADMINISTRATOR Dick Lopez
DEMAND 200
ACTIVE SUPPLY 100
TRANSPORTATION COST
GARY 25
FORT WAYNE 15
ROCKFORD 35
MADISON 45
DETROIT 5
urinets in the West. Tony ics for the er-Rific, which
The next Vans, which have no locations, owerRifics, and n the next evas
plants.
 Transportation cost matrix
Chicago Milwaukee Minneapolis
Gary 10 20 40
Fort wayne 20 30 50
Detroit 26 36 56
Madison 7 2 22
Demand 300 100 150

Shipment matrix
Chicago Milwaukee Minneapolis
Gary 200 100 0
Fort wayne 100 0 0
Detroit 0 0 0
Madison 0 0 150
Demand 300 100 150

Cost matrix
Chicago Milwaukee Minneapolis
Gary 2000 2000 0
Fort wayne 2000 0 0
Detroit 0 0 0
Madison 0 0 3300
 Cost matrix
Chicago Milwaukee Minneapolis
Gary 10 20 40
Detroit 26 36 56
Rockford 5 10 30
Madison 7 2 22
Fort wayne 20 30 50
Demand 300 100 150

Transportation cost matrix

Chicago Milwaukee Minneapolis
Gary 10 20 40
Fort wayne 20 30 50
Demand 200 50 100

Shipment matrix
Chicago Milwaukee Minneapolis
Gary 150 50 100
Fort wayne 50 0 0
Demand 200 50 100

Cost matrix
Chicago Milwaukee Minneapolis
Gary 1500 1000 4000
Fort wayne 1000 0 0

Detroit Monthly production

25 300
15 150
1 150
37 150
200

Detroit Monthly production

0 300
50 150
150 150
0 150
 20
0

10200

Transportation cost matrix

Chicago Milwaukee Minneapolis
Gary 10 20 40
Fort wayne 20 30 50
Madison 7 2 22
Rockford 5 10 30
Demand 300 100 150

Shipment matrix
Chicago Milwaukee Minneapolis
Gary 250 0 0
Fort wayne 0 0 0
Madison 0 100 50
Rockford 50 0 100
Demand 300 100 150

Cost matrix
Chicago Milwaukee Minneapolis
Gary 2500 0 0
Fort wayne 0 0 0
Madison 0 200 1100
Rockford 250 0 3000
 25 300
1 150
35 150
37 150
15 150
Detroit Capacity
Detroit Monthly production
25 300
15 150
100

200

Detroit Monthly production

0 300
100 150
100

Detroit
0
1500 9000

Transportation cost matrix

Chicago Milwaukee Minneapolis
Gary 10 20 40
Fort wayne 20 30 50
Detroit 26 36 56
Rockford 5 10 30
Demand 300 100 150

Shipment matrix
Chicago Milwaukee Minneapolis
Gary 200 100 0
Fort wayne 100 0 0
Detroit 0 0 0
Rockford 0 0 150
 Demand 300 100 150

Cost matrix
Chicago Milwaukee Minneapolis
Gary 2000 2000 0
Fort wayne 2000 0 0
Detroit 0 0 0
Rockford 0 0 4500

Detroit Monthly production

25 300
15 150
37 150
35 150
200

Detroit Monthly production

50 300
150 150
0 150
0 150
200

Detroit
1250
2250
0
10550
Detroit Monthly production
25 300
15 150
1 150
35 150
200

Detroit Monthly production

0 300
50 150
150 150
0 150
20
0

Detroit 0 750 150

0 11400