Distribution Optimization by Means of Break Quantities: A Case Study
In this paper we present a case study on physical distribution optimization in Western Europe. Finished goods of a similar nature can be delivered either from distribution centres (DC’s) or form production service centres (PSC’s). The delivery time via a DC is shorter, but higher costs are involved. The selection between the two ways of delivery is based on the stockmix and on the Break Quantities (BQ’s). The set of products present at a DC is called the stockmix, which for efficiency reasons is restricted. If a product present at a DC is ordered and the order quantity is below the break quantity, the order is delivered from the DC and else form a PSC. The problem is to decide on the stockmix and the break quantity for each DC.