Case

Spain Shipping

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Problemdefinition

Our client is a local shipping firm in Spain where they handle local shipping of packages delivered by international shipping firms like FedEx, UPS & DHL. These firms deliver packages to the key city hubs and then our client takes it from there.

They want to know how many trucks they should lease to support their operations. From a cost-savings perspective they can only lease one model-type and we need to find out how many trucks the start-up needs.


Kommentare

The candidate needs to find out how many trucks are required to support shipping operations whilst keeping costs at a minimum.

Candidate needs to provide an approach and explain this to interviewer before additional information/data is shared.

This is a case that requires optimization and candidate needs to only use data that is provided.


Kurzlösung

Client should select Model B and lease 28 trucks which will cost $1,400 day.


Detaillierte Lösung

Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section.

Paragraphs highlighted in blue can be verbally communicated to the interviewee.

Suggested case structure:

I. Data-gathering

Candidate should explain her structure on how to approach the case which should include:

  • Required packages delivered per day.
  • Working hours & days of operations.
  • Average delivery time per package.
  • Size & dimensions of each package.

Moreover, candidate should ask for data on available truck models, their associated costs & load-capacity.

Share following information with candidate upon request:

  • Each day a 1,000 packages needs delivery.
  • Packages are envelope-format and go through the mailbox with dimensions of 1x1x1.
  • Delivery service runs 5 days a week from 09.00 AM to 06.00 PM for 9 hours.
  • It takes on average 10 minutes to deliver each package.
  • Packages are dropped off by DHL, FedEx and UPS at 05.00 PM, then stored overnight and delivered the next day.

II. Required volume

The first step is to calculate the amount of trucks we need on a daily basis to deliver all 1,000 packages.

We work 9 hours a day and take 10 minutes to deliver each package, so we can deliver 54 packages each day.

In order to calculate amount of trucks required we divide total packages by daily capacity:

1,000/54=18.5 trucks.

So we need an estimated 19 trucks to deliver 1,000 packages per day.

III. Optimized solution

Share Table 1 with candidate to showcase the truck models available.

Calculating optimized option:

We need to calculate total daily costs for each model with 19 trucks.

  • Model A: (1,000*(1x1x1))/(3x4x6)=14 rounded trucks or a minimum of 19 trucks costing us 19*$160=$3,040 per day.
  • Model B: (1,000*(1x1x1))/(9x2x2)=28 rounded trucks or a minimum of 28 trucks costing us 28*$50=$1,400 per day.
  • Model C: (1,000*(1x1x1))/(6x8x11)=2 rounded trucks or a minimum of 19 trucks costing us 19*$140=$2,660 per day.

The cost-effective & optimized solution is to take 28 trucks of Model B which helps us meet our daily load & minimizes daily lease costs.

Additional explanation:

The reason why we multiply the daily cost with a minimum of 19 trucks is because we need 19 trucks every day to deliver 1,000 packages. One driver can only deliver 54 packages a day.

So we either take the minimum of 19 trucks unless a model gives us a higher number of trucks such as Model B. In that case, we need the full amount of trucks to cover 1,000 packages per day.

This is a clear example of how using a high number of smaller trucks to benefit from lower costs and a de-centralized approach.

Schwierige Fragen

What price should we charge per delivery given our daily lease costs? Keep in mind that you might have to assume other cost components such as labor & overhead.

Verwandte Consulting-Fragen
Beste Antwort bisher:
McKinsey / Accenture / More than 300 real MBB cases / Collected all Big 3 offers / Harvard Business School

Hi, 1) Youproactively ask in the beginning, even before drawing the structure (something like "What kind of products / revenue sources do we have) and then split the structure into price, qty,... (mehr)

Bisher beste Antwort von 4 Antworten:
Ex BCG | MBB Specialist | #1 Expert for meetings done (900+) and recommendation rate (100%)

Hi Moji, it seems your issue is not the math computation, but rather how to structure the math part once you receive a question (that is, the logic behind that you should apply). This means you sho... (mehr)

Bisher beste Antwort von 2 Antworten:
Ex-BCG Consultant / Interviewed 80+ applicants at BCG / Received offers from McK (US) and BCG (DE)

Hi Anonymous! Both are valid approaches. As a rule of thumb, 1) is more suitable for a quantitative assessment (e.g. "By how much has profit declined?"), while 2) seems like a good approach for a... (mehr)

Hi Aditya, I see that this problem consists of 2 questions: Where can we reduce supply chain costs? How to reduce them? First we need to start with figuring out where exactly the probl... (mehr)

Bisher beste Antwort von 3 Antworten:
McKinsey / Accenture / More than 300 real MBB cases / Collected all Big 3 offers / Harvard Business School

Hi, Focus on the most common industries in the followingpriority (sorted by probability of geting a case): 1-retail and CPG; 2-airlines; 3-Telecom; 4-banking; 5-natural resources; 6-tech There a... (mehr)

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