Community Discussion Topic

Hi everyone,

I have a question regarding centralized warehousing, sometimes known as the "hub-and-spoke" method. This would be under a scenario where there is a single vendor and a company with multiple retailer locations (with one corporate location). Basically, each retailer makes their orders to the vendor, and separate direct shipments are made from the vendor to each of the retailers. Suppose the company has warehousing space at their corporate location, and would like to transform that into a centralized warehouse. Under the new system, one bulk shipment would be made to the warehouse , broken up and distributed to the retailers. Of course, determining if this is feasible means estimating the costs and comparing the current system with this new proposed system. This involves estimating material costs, transportation costs, performing lot sizing for the new system, etc.

Most of the research and case studies I find on this topic use a form of non-linear programming to decide which itemsets should "flow" through the warehouse vs through direct shipment. The objective being to minimize the inventory, transportation and material costs.

I am asking today if anyone is aware of good research articles about this type of problem.

Thanks!