In the urban landscape of New York City, McDonald’s aims to optimize its logistical operations for a select group of ten outlets, originating from its distribution center in Jersey City, NJ. The study seeks to meticulously plan the routing, leveraging the capacity of two available vans. The approach requires an evaluation of time intervals for loading, documentation, and return processes, along with estimating the inter-location travel durations. An intrinsic aspect of this research will be the computation of associated fuel expenditures for these vans, drawing on their specified fuel consumption rates and prevailing fuel costs. For the first question of the paper will delineate the proposed routes, elucidate on the most effective sequencing of deliveries, and present a comprehensive analysis of the consequent fuel costs, broken down into daily, monthly, and annual projections.
Fixed and Variable Costs per van
Within the area of urban logistical operations, it is important to have a robust understanding of the costs involved. These costs can be classified into fixed and variable categories. For the McDonald’s delivery vans, the annual fixed costs are composed of several key components: depreciation, which is calculated based on the initial cost minus salvage value over a lifespan of 5 years, resulting in an amount of €14,000; the yearly expenditure on tires amounting to €1,000; charges incurred from fines and adherence to low emission zones, which totals €1,500; insurance costs of €4,000; taxes which stand at €6,000; and overheads which aggregate to €20,000. These elements coalesce to generate a yearly fixed cost of €46,500, or a monthly breakdown of €3,875.
In comparison to the fixed costs, the variable costs are influenced by the operational attributes. There are driver wages, amounting to 36,000 euros yearly or 3,000 euros monthly. Additionally, fuel costs play a significant role. Given the daily travel distances of 25 km and 35 km for Van 1 and Van 2 respectively, both vans combined consume approximately 18 liters daily. This amounts to a daily fuel expenditure of 36 euros, leading to monthly and yearly costs of 1,080 euros and 13,140 euros respectively. Summing up the monthly fixed and variable costs, the total operational expenditure per month is estimated to be 7,955 euros. This comprehensive breakdown facilitates informed decision-making, ensuring both economic efficiency and operational effectiveness in the delivery process, the Figure below will show my calculations.
Table 1: Fixed & Variable costs
Map transport planning
In this following segment we will go through the crafted delivery strategy for McDonald’s New York City outlets, utilizing two dedicated vans starting from a central distribution center in Jersey City, NJ. The reasoning behind the plan is to create an efficient routing strategy by dividing the locations into two sets based on their geographical proximity, allowing each van to serve a cluster of locations efficiently. This division of routes is designed to streamline the routes for each van to ensure timely and efficient delivery to ten specific McDonald’s locations while taking into account the constraints of urban traffic flow and delivery schedules. By assuming a moderate travel speed reflective of New York City’s traffic conditions we can calculate the daily route distance for each van we can thereafter determine the fuel costs incurred. This initial analysis serves as a baseline for developing a cost-effective delivery schedule that meets the targets of both McDonald’s operational requirements and maintaining our fiscal responsibilities.
Van 1’s chosen route is designed to strategically cover five McDonald’s restaurants located in Lower Manhattan and the East Village. This routing option is supported by the concept of geographic closeness, which makes it possible to minimize delivery efficiency by cutting down on trip time and distance. Van 1 may better manoeuvre through the congested urban environment by concentrating on a small group of sites. This helps to reduce the likelihood of delays resulting from traffic jams, which is a major problem in the streets of New York City.
The van is positioned to approach the city close to one of the southernmost delivery spots by starting the journey from the distribution centre in Jersey City, NJ, to the first stop at 160 Broadway. The path then continues northward, including stops at 102 1st Avenue, 724 Broadway, 39 Union Square W., and 541 6th Avenue, where the final city delivery is made. Every site is chosen according to the specific order that reduces the amount of backtracking and unnecessary inter-city travel. This strategy not only saves fuel but also ensures quick delivery—an important consideration looking at the early morning hours McDonald’s needs to restock to meet the demand for breakfast. Van 1 heads back to the distribution centre after completing the city circuit, where it is unloaded and ready for the upcoming day’s deliveries, the image below will illustrate van 1’s daily route.
Image 1: Van 1 route
The route that van 2 travels is through the heart of Midtown Manhattan, targeting six McDonald’s locations. This route is also designed to take advantage on the close proximity of destinations within the midtown area increasing its efficiency. Starting from the distribution center, Van 2’s journey begins by crossing into Manhattan likely by the Holland or Lincoln Tunnel, which is strategically positioned to reach the central and northernmost parts in the delivery zone.
The route progresses through Midtown’s passages, first delivering to 541 6th Avenue and then moving to 686 6th Avenue which are in close proximity to each other, making sure that there is minimal travel time and leveraging the short distance between stops. From there Van 2 goes to 809 Avenue of the Americans and then to 429 7th Avenue, each stop is selected from a practical logistic standpoint essentially forming a northward path that avoids unnecessary detours. The following stop I the Times Square location at 1528 Broadway, a decision that takes into account the need for early delivery before the pedestrian and tourist traffic peaks. The final stop in the city is at 966 3rd Avenue after which the van will return to the distribution center.
The route for van 2 is strategic in planning s each stop is calculated in a complex network of city streets. Each stop is planned not only for their special relation but also for their ability to facilitate a seamless flow of operations in the middle of Midtown Manhattan. The Image below will illustrate the daily route taken by van 2.
Image 2: Van 2 Route
Sum of $ for every day, week, and 3 months
In conducting a comprehensive financial analysis for the proposed McDonald’s delivery operation in New York City I have calculated a detailed breakdown of both of the fixed costs and variable costs associated with the us of two vans. My objective is to work out the overall financial commitment that is required for a pilot project scheduled to run for three months starting from January first, 2924 until March thirty-first 2024. The analysis encompasses a range of all cost factors we have already stated in the paper.
Fixed costs which remain constant regardless of the Vans’ operational mileage including yearly expenses such as depreciation at 14,000 euros, tire costs at 1,000 euros, fines and low emission zone fees at 1,500 euros, insurance at 4,000 euros, taxes at 6,000 euros, and overhead costs at 20,000 euros. The sum of all of being 46,500 euros annually per van, which than translates to 3,875 euros monthly. The variable costs on the other hand which are primarily driven by the distance traveled as well as the drivers salary of 36,000 euros annually (or 3,000 euros monthly) and fuel costs which as stated previously based on a realistic approximation of the data. Assuming an average speed of twenty km/hour in NYC traffic and a total daily travel distance of sixty km for both vans, the daily fuel costs are calculated at thirty-six euros, monthly coming to 1,080 euros and yearly at 13,140 euros for the both vans combined.
The accumulation of these costs provide a comprehensive view of the financial requirement for this operation. Per van the monthly cost stands at 7,415 euros which translates to a daily cost of approximately 247.17 euros and a weekly cost of about 1,730.19 euros. As this operation plan uses two vans these costs double bringing the monthly to a total of 14,830 euros the daily total to 494.34 euros and the weekly total to 3,460.38 euros. Over the span of the three month pilot the total expenditure is projected at 44,490 euros. Moreover as this project is taking place in the US all costs have been converted into dollars with an assumed conversion rate of one euro equalling one-point-one US dollar. As a result the daily cost is estimated at 543.77 dollars, the weekly cost at 3,806.42 dollars, and the total cost for the three-month period at 48,939 dollars, the table below presents all the data in a simple format.
Cost Type Euro USD
Fixed monthly € 3,875.00 $ 4,262.50
Variable Monthly € 3,540.00 $ 3,894.00
Monthly Total € 7,415.00 $ 8,156.50
Daily Total € 247.17 $ 271.89
Weekly Total € 1,730.19 $ 1,903.21
Total for 2 Vans
Monthly Total € 14,830.00 $ 16,313.00
Daily Total € 494.34 $ 543.77
Weekly Total € 3,460.38 $ 3,806.42
3-Month Total € 44,490.00 $ 48,939.00
Table 2: Sum daily, weekly, three months
Distribution center opening hours and driver shifts.
Given that the distribution center operates from six am to 10 pm and that the drivers working hours are eight-hour shifts including breaks, I would say that we have many windows in order to optimize delivery schedules. This timeframe allows for flexibility and can be leveraged in order to avoid peak traffic hours which is crucial in a heavily congestible city like New York where traffic can significantly impact delivery times.
For this plan I have decided to adopt the early morning shift running from six am to two pm, This shift aligns perfectly with the bustling environment of the city ensuring that the deliveries are completed well ahead of the lunchtime rush which is critical for McDonalds fast food. By starting our operations at six am the vans take full advantage of the light traffic conditions that are prevalent in the early hours, this substantially eliminates the risks of delays that may be caused by the notorious NYC traffic. This time shift also aligns perfectly with McDonalds need to replenish their stock in preparation for the busy day ahead.
By completing a significant portion of the deliveries in the morning it allows for a more even distribution of workload throughout the day reducing the pressure on subsequent shifts. Additionally this schedule helps in optimizing fuel efficiency as driving in less congested areas translates to less idling and more consistent travel time leading to reducing fuel consumption and associated costs.
Further more, the early morning shifts ensures that the vans return to the distribution center well before the evening which gives enough time for them to be reloaded and prepared for the next day. This systematic turnaround is essential in maintaining an efficient operation ensuring that each day starts with vans that are fully prepared and ready to go for the next day. To conclude this shift is not merely a scheduling choice but a strategic decision that improves overall operational efficiency aligning with the demand times of McDonald’s and reduce the challenges of city logistics in NYC.
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