Warehouse Placement and Network Optimization
When deciding how to optimize the entire distribution network of a large enterprise, it is important to use information that is as accurate as possible. These kinds of decisions result in large capital expenditures with substantial long term implications. Decisions include which delivery mode to use, how many facilities including factories, warehouses and distribution centres to use and where, and what delivery strategy will result in the best trade-off between customer service, stock-holding costs, replenishment costs, and distribution costs.
Our usual methodology involves a two-stage process. In the first phase, as a rough estimate, we model the network by minimizing costs on the basis of straight-line distances between facilities and customers and total material movements. In the second phase, we refine and confirm the original solution by modeling the network exactly using specific deliveries on the road network, with specifically modeled vehicle fleets and costs.
