TRANSPORTATION ISSUES FOR DECIDING WHEN TO DIPLOID A NEW DISTRIBUTION CENTER

Marcos Singer () and Patricio Donoso ()

Abante, 2000, vol. 3, issue 2, 227-247

Abstract: This work analyses the problem of defining when to diploid a new distribution center. The decision model considers the usual logistic cost drivers such as shipping, inventory, infrastructure and administration, focusing in the first one. The shipping cost driver is determined by the client coverage of the centers, which is calculated using a first order condition heuristic that takes into account the facilies' internal congestion. The model is applied to a company that operating in Santiago de Chile which faces a highly seasonal demand. We show that by defining the coverage in a dynamic fashion that depends on the demand, it is possible to postpone the deployment of a new center so the company can save an estimate of 2 percent of the delivery cost.

Keywords: Distribution center; coverage; transportation; Chile (search for similar items in EconPapers)
JEL-codes: L81 L91 R41 (search for similar items in EconPapers)
Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:pch:abante:v:3:y:2000:i:2:p:227-247

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