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Transportation Issues For Deciding When To Diploid A New Distribution Center

Author

Listed:
  • MARCOS SINGER

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

  • PATRICIO DONOSO

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

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.

Suggested Citation

  • Marcos Singer & Patricio Donoso, 2000. "Transportation Issues For Deciding When To Diploid A New Distribution Center," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 3(2), pages 227-247.
    • Handle: RePEc:pch:abante:v:3:y:2000:i:2:p:227-247
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    File URL: http://www.abante.cl/files/ABT/Contenidos/Vol-3-N2/4%20Singer%20Donoso.pdf
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    More about this item

    Keywords

    Distribution center; coverage; transportation; Chile;
    All these keywords.

    JEL classification:

    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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