Distribution networks are generally designed to minimize the delivery time or distance to an assumed future customer base. This approach provides good solutions to the distribution problem and results in excellent on-time delivery performance but it may not minimize the total costs of delivering products to customer sites. Of particular concern is the fact that truck freight rates vary considerably depending upon the type of market in which distribution centers are located. This paper considers truck freight rates and market types as a distribution center site location criterion and compares the total delivery costs under traditional and alternative site selection methods. The results indicate that explicitly considering outbound freight rates as a primary site selection criterion can lead to considerable savings.
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