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Product allocation to different types of distribution center in retail logistics networks

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  • Holzapfel, Andreas
  • Kuhn, Heinrich
  • Sternbeck, Michael G.

Abstract

We consider the problem of assigning stockkeeping units to distribution centers (DCs) belonging to different DC types of a retail network, e.g., central, regional, and local DCs. The problem is motivated by the real situation of a retail company and solved by an MIP solution approach. The MIP model reflects the interdependencies between inbound transportation, outbound transportation and instore logistics as well as capital tied up in inventories and differences in picking costs between the warehouses. A novel solution approach is developed and applied to a real-life case of a leading European grocery retail chain. The application of the new approach results in cost savings of 6% of total operational costs compared to the present assignment. These savings amount to several million euros per year. In-depth analyses of the results and sensitivity analyses provide insights into the solution structure and the major related issues.

Suggested Citation

  • Holzapfel, Andreas & Kuhn, Heinrich & Sternbeck, Michael G., 2018. "Product allocation to different types of distribution center in retail logistics networks," European Journal of Operational Research, Elsevier, vol. 264(3), pages 948-966.
    • Handle: RePEc:eee:ejores:v:264:y:2018:i:3:p:948-966
    DOI: 10.1016/j.ejor.2016.09.013
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    2. Gupta, Anshu & Pachar, Nomita & Jain, Akansha & Govindan, Kannan & Jha, P.C., 2023. "Resource reallocation strategies for sustainable efficiency improvement of retail chains," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    3. Zhanwei Tian & Guoqing Zhang, 2021. "Multi-echelon fulfillment warehouse rent and production allocation for online direct selling," Annals of Operations Research, Springer, vol. 304(1), pages 427-451, September.
    4. Dan Yang & Weili Yin & Sen Liu & Felix T. S. Chan, 2022. "Understanding the Effect of Multi-Agent Collaboration on the Performance of Logistics Park Projects: Evidence from China," Sustainability, MDPI, vol. 14(7), pages 1-23, March.
    5. Straubert, Christian, 2024. "A continuous approximation location-inventory model with exact inventory costs and nonlinear delivery lead time penalties," International Journal of Production Economics, Elsevier, vol. 268(C).
    6. Elisabeth Obermair & Andreas Holzapfel & Heinrich Kuhn, 2023. "Operational planning for public holidays in grocery retailing - managing the grocery retail rush," Operations Management Research, Springer, vol. 16(2), pages 931-948, June.
    7. Baldi, Mauro Maria & Manerba, Daniele & Perboli, Guido & Tadei, Roberto, 2019. "A Generalized Bin Packing Problem for parcel delivery in last-mile logistics," European Journal of Operational Research, Elsevier, vol. 274(3), pages 990-999.
    8. Holzapfel, Andreas & Potoczki, Tobias & Kuhn, Heinrich, 2023. "Designing the breadth and depth of distribution networks in the retail trade," International Journal of Production Economics, Elsevier, vol. 257(C).
    9. Klumpp, M. & Ruiner, C., 2018. "Digitalization and Work Organization in New Urban Food Delivery Systems," 2018 International European Forum (163rd EAAE Seminar), February 5-9, 2018, Innsbruck-Igls, Austria 276876, International European Forum on System Dynamics and Innovation in Food Networks.

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