Inventory, transportation, service quality and the location of distribution centers

A crucial question in the design of efficient logistics systems is the identification of locations for distribution centers. However, the optimization of these location decisions requires careful attention to the inherent trade-offs among facility costs, inventory costs, transportation costs, and customer responsiveness. This paper presents a modeling approach that provides such an integrated view, and illustrates how it works in the context of a specific example involving the distribution of finished vehicles by an automotive manufacturer.