A disjunctive model to analyze and redefine the logistic of replenishing goods of retailing stores

Abstract

This paper analyzes the distribution logistics for a retail business that has hundreds of stores located long distances from their warehouses. Given narrow revenue margins, retail companies must optimize the cost of the merchandise delivery to its stores. In general, the structure of the distribution consists of warehouses that concentrate goods which are then delivered to the stores according to a replenishment policy that contemplates its characteristics and location. The cost of the distribution logistics is significant and deserves special consideration. This paper presents a disjunctive multi period model to redesign the logistic infrastructure of delivering goods from warehouses to stores located in a wide geographical region. In the model, a warehouse can be installed, closed, expanded or replaced by a cross-docking terminal. The objective function is to minimize the cost of the whole distribution operation. A case study is presented to show the model capabilities.