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Distribution: inventory and transport - Distribution location

5 important questions on Distribution: inventory and transport - Distribution location

Which three functions can a DC fullfill?

1. Storing goods (inventory function)
2. Regrouping goods (regrouping function)
3. Transferring goods to another means of transport (transshipment function)

Which 8 questions have to be awnsered before a decision can be made about establishing a DC?

What is the nature of the goods?
where are the supply points of the goods located?
where are the customer located?
what is the nature of the distribution channel?
what means of transport are involved in the supply and distribution of goods?
what is the maximum and what is the minimum amount of goods that the DC should be able to process per time unit?
what level of service do we want to realise for the customers?
what are the costs involved in transport, handling and storage?

In which two models can you divide the location model and what are there two models?

The location model can be divided into the analytic model and the heuristic model.

the analytic model looks for the best location from a set of alternatives, using techniques that have been proven to determine the mathematical optimum.
the heuristic model is slightly less complex as these work with a limited number of rules of thumb and give priority to using an acceptable amount of computer time.

What is the centre of gravity model?

The centre of gravity model is an analytic model. The grid model is often used to make rough calculations for the location of a new DC. The ideal location is chosen so that the transport costs are minimal.

Which other 9 variables play a part in choosing the right location for a DC?

The local labour market
the local housing market situation
employees wishes and requirements in case of transferring
the presence of local or regional suppliers
the social and cultural infrastructure
opportunities for local financing and investment premiums
the natural condition of construction sites and /or the availability of existing buildings
the transport infrastructure
environmental aspects