(Steven Owen, Nicole Robinson, Nina Trujillo, 202)
Coca-Cola and the vending machines that we have purchased them from for decades are as American as apple pie. In the last several decades few things have changed, soft drinks are still in high demand but they no longer cost a nickel. The distribution process that delivers the drinks to the vending machine are no different, it is no wonder why a Coke does not cost a nickel anymore.
American business has developed, grown and adopted technology to decrease costs and increase profits but the archaic business of vending machine distribution is one of the last dinosaurs around that has not fully evolved. Although they use some simple linear regression forecasting and some route optimizing solutions, they are refilling their machines at an inefficient 55.13% refill rate. This means, on average, they are refilling their vending machines when they are more than half full. This is obviously a very inefficient and frivolous waste of resources. Our method of analysis has provided us with an insight into cost saving opportunities. Our analysis is based on information that we received from the Coca-Cola Bottling Company of North Texas about their vending operations.
Our method simulates a 90-day period with five different simulation models using constant demand, variable demand, daily refilling, and weekly refilling, with their current refill rate and our refill rate. This method is based on the assumption that with real-time inventory processes, it is possible to have a refill rate as low as 10%. This is highly possible with the use of current technologies. This analysis and its findings reflect that a significant percentage of distribution costs can be saved if a real-time inventory system is implemented. The implementation of such a system would surely cost a pretty penny but the amounts of returns are only a function of time. The utilization of dozens of Linear Programs that optimize route distances contributes to the savings. With the sample of machines that we have analyzed over the 90-period we have found a significant reduction in travel and labor time that have produced an average reduction in distribution costs of 46.6%, a highly significant number.