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Transportation Issues For Deciding When To Diploid A New Distribution Center



    (Escuela de Administración, Pontificia Universidad Católica de Chile)



    (Escuela de Administración, Pontificia Universidad Católica de Chile)

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.

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Article provided by Escuela de Administracion. Pontificia Universidad Católica de Chile. in its journal ABANTE.

Volume (Year): 3 (2000)
Issue (Month): 2 ()
Pages: 227-247

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Handle: RePEc:pch:abante:v:3:y:2000:i:2:p:227-247
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