Distribution and replenishment optimization between locations of high and low real estate cost

As companies expand and innovate, it is sometimes prudent to be conservative when incorporating new products and technologies. Instead of constructing buildings to store new products, firms may look to optimize re-allocation of space within existing facilities to fit more products and save on one-time capital outlay. In this research, the Distribution Center (which also picks and packs products according to incoming orders) is looking to optimize utilization of offsite storage (and transportation) costs in the face of growing product demand. The DC is situated in a region of High Real Estate cost, and there is potential to increase utilization of offsite leased storage at Low Real Estate cost areas. To investigate potential changes, research will be divided into two parts: Part One looks to optimize product storage within the current Distribution Center and Offsite Warehouse network, by developing a model that incorporates product demand, product sizes and replenishment frequency. Part Two utilizes the built model to investigate alternative offsite solutions, taking into consideration Real Estate costs, transportation frequency and other factors. Previous research papers have looked at the two parts separately, whilst this research aims to link the two parts together. Finally, a simple and easy to use decision-support tool was developed that allows users to periodically review and adjust product allocation based on product information, demand and Real Estate costs.

Name thesis:degree_name

Master

Department dc:contributor.department

Sloan School of Management

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2020

Author dc:creator

• He, Denton(Denton Xiang)

Advisor dc:contributor.advisor

• Hermano Igo Krebs and Jónas Oddur.

• Sloan School of Management.
• Mechanical Engineering.
• Leaders for Global Operations Program.

Statement dc:rights

• MIT theses may be protected by copyright. Please reuse MIT thesis content according to the MIT Libraries Permissions Policy, which is available through the URL provided.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

https://hdl.handle.net/1721.1/126902

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/126902