Foulke Consumer Products, Inc.: The Southeast Region

Abstract

At the core of this case is a distribution, or sourcing, problem that can be modeled and solved using linear programming (LP). There are also issues of whether to build (a) new plant(s)--and if so, what the capacity should be--and whether to expand or close one or more of the existing plants. These latter issues can be analyzed using a 0/1 LP facility-location model. Alternatively, because the number of options is limited, they can be analyzed using the straight LP model of the distribution problem as a tool to facilitate analysis.

Excerpt

UVA-QA-0392

Rev. Mar. 28, 2016

FOULKE CONSUMER PRODUCTS, INC.:

The Southeast Region

In 1977 Foulke Consumer Products, Inc. was a small manufacturer and distributor of Brand A of a durable consumer product, with $ 42 million in sales and less than 5% of the market. Ten years later, Foulke had almost $ 600 million in sales and over 25% of the market. This tremendous growth, achieved primarily through acquisitions, caused a strain on the organization, particularly the manufacturing side. The company had grown from 4 plants serving 5 states to over 40 plants serving the entire country. Many of the acquired plants had formerly competed within the same regions; hence, some redundancies existed. Foulke faced the task of dealing with these regional capacity/profitability problems.

The Industry

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Keywords: capital investment, distribution management, linear programming, purchasing