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Global Optimization of Physical Distribution Network

IP.com Disclosure Number: IPCOM000049840D
Original Publication Date: 1982-Jul-01
Included in the Prior Art Database: 2005-Feb-09
Document File: 2 page(s) / 13K

Publishing Venue

IBM

Related People

Dawkins, J: AUTHOR

Abstract

This algorithm is concerned with the distribution of goods from central supply points (warehouses or factories) to dispersed depots. This distribution is necessary in order to maintain the levels of stocks at the depots in the face of customers' demand. It deals with bulk distribution to relatively few depots, rather than local trips to many customers.

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Global Optimization of Physical Distribution Network

This algorithm is concerned with the distribution of goods from central supply points (warehouses or factories) to dispersed depots. This distribution is necessary in order to maintain the levels of stocks at the depots in the face of customers' demand. It deals with bulk distribution to relatively few depots, rather than local trips to many customers.

The solution required is a shipping policy for each depot. This is to mean a shipping frequency rather than a dated set of replenishment loads. To this end, forecast demand for products is expressed as a rate, rather than a set of fluctuating weekly figures.

To reduce the size of the problem, products are gathered into distribution groups. Since a product as stocked at a depot is known as a Stock Keeping Unit (SKU), a group of products as stocked at a depot is known as a SKU-group.

All products within a distribution group must have similar distribution characteristics. A possible means of replenishment, that is a vehicle over a route from a supply location, is called a distribution channel. All products within an SKU-group must have the same possible distribution channels.

The shipping policy derived must support the demands for products at the depots within the following constraints: * Availability of products at the supply locations. Some products may be able to be supplied from alternative

locations. * Availability of vehicles. * Ability of warehouses and factories to handle the goods.

The technique is iterative and consists of two phases to each iteration. In the first, SKU-groups are allocated to distribution channels in an order based on the costs associated with these channels. In the second phase, this allocation is used to refine the cost estimates.

Allocation

Each SKU-group in turn is allocated to a distribution chann...