Consolidating a warehouse network: A physical programming approach

Faced with mounting cost pressure, many companies consider downsizing their distribution networks in ways that involve consolidation or phase-out of some of their existing warehousing facilities. To effectively re-configure a warehouse network through consolidation and elimination, this paper proposes a novel multiple criteria methodology called physical programming (PP). The proposed PP model enables a decision maker to consider multiple criteria (i.e., cost, customer service and intangible benefits) and to express criteria preferences not in a traditional form of weights, but in ranges of different degrees of desirability. The proposed model is tested with real data involving the reconfiguration of an actual company's distribution network in the United States and Canada.