In designing a production-distribution system, locating distribution centers (DCs) is one of important concern. The distribution center system consists of one or more production plants, a group of distribution centers, and retail outlets and customers (see figure 1).Two questions related to DC location decision are "How many DCs should there be?" and "Where should they be located?" which refer to the numbers and locations of distribution centers under different circumstances.
In general, the main goal in site selection is to optimize customer service while minimizing costs associated with transportation, labor, real estate and taxes. For the most important selection criteria,Atkinson (2002) concluded that "Transportation consideration" are the most important factor with different aspects: the proximity to customers (being able to make quick and dependable JTT deliveries), the expense, with transportation costs being a large part of the supply chain budget, the shortage of drivers who are interested in long-haul driving, and the proximity to transportation routes (interstates, rail service, waterways, ocean ports). Other criteria are in concern: "Labor costs and availability", "Real estate costs", "Taxes", "Incentives (from governments and economic development group)", and "Utilities". Applications of location problems are abundant and are found in both manufacturing and service. Some applications provide graphical solutions showing numbers and locations of distribution centers as see in Figure2.
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