Paper Info
Title
Ship-pack optimization in a two-echelon distribution system.
Abstract
In large distribution systems, distribution centers (DC) deliver some merchandize to their retail stores in size-specific packages, also called ship-packs. These ship-packs include cases (e.g., cartons containing 24 or 48 units), inners (packages of 6 or 8 units) or caches (individual units). For each Stock Keeping Unit (SKU), a retailer can decide which of these ship-pack options to use when replenishing its retail stores. Working with a major US retailer, we have developed a cost model that balances DC handling costs, store handling costs and inventory-related costs at both the DC and the stores, and therefore can help to determine the optimum warehouse ship-pack for each SKU. We implement our model for a sample of 529 SKUs, and show that by changing ship-pack size for about 30 SKUs, the retailer can reduce its total cost by 0.3% - 0.4%. Interestingly, we find that most of the cost savings occurs at the DC level. (C) 2012 Elsevier B.V. All rights reserved.
Year
DOI
Venue
2012
10.1016/j.ejor.2012.02.003
European Journal of Operational Research
Keywords
Field
DocType
Ship-pack,Distribution system,Retail,Replenishment,Inventory optimization
Warehouse,Distribution system,Stock keeping unit,Carton,Total cost,Inventory optimization,Operations management,Mathematics
Journal
Volume
Issue
ISSN
220
3
0377-2217
Citations 
PageRank 
References 
5
0.52
2
Authors
3
Name
Order
Citations
PageRank
Naijun Wen150.52
Stephen C. Graves2712146.27
Z. Justin Ren313710.06