Article ID: | iaor200647 |
Country: | Netherlands |
Volume: | 162 |
Issue: | 1 |
Start Page Number: | 191 |
End Page Number: | 205 |
Publication Date: | Apr 2005 |
Journal: | European Journal of Operational Research |
Authors: | Shah Janat, Gupta Omprakash K., Avittathur Balram |
Keywords: | programming: integer, programming: nonlinear |
The central sales tax (CST) in India results in a differential sales tax structure. This contributes significantly to distribution network decisions that build logistics inefficiencies in firms operating in India. In this paper, we develop a model for determining distribution centres (DCs) locations considering the impact of CST. A non-linear mixed integer-programming problem that is formulated initially is approximated to a mixed integer-programming problem. Using a numeric example, the effect of CST rates and product variety on DC locations is studied and found to be having impact. It is felt that the Indian Government proposal to switch over from the present sales tax regime to value added tax (VAT) regime would significantly contribute to reducing the logistics inefficiencies of Indian firms.