Optimal location of cross-docking centers for a distribution network in Argentina

Abstract

The objective of this thesis is to define an optimal distribution network for Argentina using Cross Docking Centers. The products to be delivered are in a Central Warehouse in Buenos Aires, the main city and port of Argentina. These products have to be distributed to hundreds of locations in the interior of the country. These locations have lower levels of demand and are at great distance from Buenos Aires. In order to achieve efficient distribution, cross docking centers and a third party carrier distribution are utilized. To find the optimal number, size and location of cross docking centers and which cross docking center or carrier should supply each location, two models are developed. The first model is a location-allocation model in which capacities of the cross docking centers are not considered constraining. In this case, the model is complemented by a heuristic approach that is used to find a near-optimal feasible solution. The second model, a capacited location model, is more complex, taking into account the demands of each location and defining the optimal location of cross docking centers and their respective capacities. Both models are analyzed with the data representing the distribution of pharmaceutical products in Argentina in 1999. The models' solution generates savings of 5%, compared to the current network that was designed based on intuition and other external factors, without the use of an optimization tool.