A decision support system for evaluation of European logistics outsourcing


The paper describes some of the environmental and business factors that affect the design of distribution networks. It presents a Decision Support System (DSS) for the strategic design of distribution networks suitable for use with 3rd party logistics providers. The DSS is based on minimizing the sum of the transportation and stock holding costs, whilst providing adequate customer service levels in terms of order cycle times. A case study of the practical implementation is given. The DSS has been developed in real-time with refinements as and when required by the industrial partner thus validating its ability to meet the expectations of real-world users. The results of several simulation studies on methods of controlling distribution networks are outlined. A sensitivity analysis using the DSS on typical data using Taguchi Method and ANOVA, shows our industrial case study, that the major driving force in the inventory holding costs on the distribution network design. The paper concludes that over 80% of the final design decision is attributed to the cost of capital within a company whilst accounting for 50% of the logistics costs. Also, it is established that the number of facilities within the distribution network is robust to demand changes.

15th International Conference on Production Research, 9th-13th August, Limerick, Ireland, Vol. 1, 625-628