An Investigation on Moving Policies for a Distribution Center of a On-Line Retailer
Date Issued
2011
Date
2011
Author(s)
Wang, Chun-Kai
Abstract
This research studies the logistics activities when a retailer is in the transition of moving its current distribution center (DC) to a new location. Because of expanding business, an online store is required to build a more spacious DC to sustain the increasing customer orders. During the early stage of the transition period, customer orders are still fulfilled by the current DC. At the same time, inventory has to be gradually transported to the new DC. If a product is moved to the new DC but an order of that product arrives, emergency shipping is required to move the product back to the current DC and an extra cost incurs, Given the inventory levels of products, the customer forecasts and the capacity of trucks, the online retailer has to determine a logistics plan of moving items to the new facility so that the cost is minimized including shipping cost, the penalty of shortage, and the penalty of complicated moving operations.
A deterministic integer programming model is formulated. Although this model can obtain an optimal solution, it is time consuming to solve a real-world problem in a large scale. In additions, demand orders in fact are uncertainty and the objective such as complexity of packing items in a truck is not simple to quantify. Therefore, a system simulation model is constructed, which can authentically reflect the results of practical moving policies without the drawbacks as mentioned in the mathematical model. Moving policies’ performance can be measured by different criterion, such as order fulfill rate, the number of emergency shipments, complexity. This research compares the simulation results them to provide the decision makers the most suitable moving policy under each condition.
Subjects
Distribution Center
Supply chain
Lateral emergency transshipment
Moving policy
Type
thesis
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