## Problem Definition

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.

## Comments

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.

## Short Solution (Expand)

## Detailed Solution

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.

- 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

#### 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.

## Difficult Questions

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.