Josephine Mater works for the supply-chain analytics division of Trader Joe's, a national chain of specialty grocery stores. Trader Joe's is considering a redesign of its supply chain. Josephine knows that Trader Joe's uses frequent truck shipments from its distribution centers to its retail stores. The file TraderJoes contains data on the location of Trader Joe's retail stores. To keep costs low, retail stores are typically located near a distribution center. Normalize the values of the input variables to adjust for the different magnitudes of the variables. Josephine would like to use k-means clustering to estimate the location and number of Trader Joe's distribution centers (information on Trader Joe's distribution centers is not publicly disclosed). Refer to the Appendix for instructions on how to perform k-means clustering method using JMP Pro. In the Clustering - JMP Pro dialog box, in the Options area, select KMeans, check Columns Scaled Individually and check Johnson Transform. When the Data - K Means Cluster JMP Pro dialog box appears, set Number of Clusters to 8.
(a) Find the number of retail stores for Trader Joe's distribution centers. Distribution Center Number of Retail Stores н м а р п о у о
(b) What are the drawbacks to using this solution approach to assign retail stores to distribution centers?
According to this solution, between and retail stores would be assigned to each distribution center. It very unusual to assign a distribution center to a single store. It would also result in distribution centers with very different sizes. This type of solution approach consider the amount of material being supplied to each retail store from the distribution center.