Determining optimal locations of distribution centres to minimise transportation costs

摘要

Locating and allocating distribution centres optimally is a vital decision in supply chain management. Doing so will improve the efficiency of the logistics system as well as reduce its operating costs significantly. In this study, we develop a mixed-integer mathematical model to determine the optimal locations and allocations of distribution centres, which minimise the operational cost. The performance of this model is then tested using data collected from a leading building products distribution company in the USA. The computational results were analysed to determine whether the company can reduce its transportation and operational costs significantly by implementing new optimal distribution locations. Results show that the company can reduce its transportation costs 20% by implementing the location and allocations given by the proposed mathematical model.