GENERAL OVERVIEWThe Merloni Company was created in 1930 by Aristide Merloni. After the Second World War Merloni began to expand its product range and by the 1960s and 1970s Merloni was already the largest manufacturer of high-quality household appliances, operating both in Italy and Europe. At some point in the 1970s, the company became the Merloni Group consisting of four subsidiary companies. Merloni Progetti for industrial projects; Merloni Igienico Sanitari for bathroom and heating products; Merloni Casa for built-in kitchen and bathroom furniture; and Merloni Elettrodomestici for household appliances. The latter is the subsidiary with the highest percentage of consolidated turnover. COSTS AND BENEFITS OF THE CURRENT MERLONI DISTRIBUTION SYSTEM Analyzing the current distribution model, several defects are found. First, inventory management is very decentralized and there are few formal replenishment methods. Regional warehouse managers simply set stock targets and call the central warehouse daily with a list of replenishment needs. This lack of control can lead to excess inventory, creating a higher inventory cost or an out-of-stock situation. When the latter case occurs, the regional warehouse manager must order the requested product from the central warehouse and to compensate customers he offers a discount of 4,000 lire per piece. We also realized that transport costs are particularly high because every finished good, no matter where it comes from, must be brought to the central warehouse and immediately afterwards sent to the regional warehouse. However, in some cases the products simply "travel" through Italy creating unnecessary transportation costs. For example, a dishwasher produced in Bonferraro goes to the central warehouse...... middle of paper......would invest in training programs. Have an alternative means of transporting products available in the event of foreseeable storm situations or other truck problems. For example by plane or ship (only applicable for long distances). In addition to these contingency plans there are some changes we recommend to Merloni's integrated distribution system: In order to reduce transportation costs we recommend the creation of another strategically located central warehouse. Far from Fabriano and close to a high demand region. The sales manager should be responsible for the entire sales process. Although we do not have sufficient information to make such an important decision, Merloni should consider outsourcing the transportation of the products.