Article ID: | iaor20062441 |
Country: | United Kingdom |
Volume: | 14 |
Issue: | 4 |
Start Page Number: | 321 |
End Page Number: | 336 |
Publication Date: | Oct 2003 |
Journal: | IMA Journal of Management Mathematics (Print) |
Authors: | Drezner Zvi, Song Jing-Sheng, Scott Carlton |
Keywords: | storage, inventory |
This paper is concerned with the optimal location of a central warehouse, given a fixed number and the locations of the local warehouses. We investigate whether the solution determined by the traditional model that minimizes total transportation cost differs from the one determined by a model that also takes into account the inventory and service costs. We build simple models to address this question. Numerical results show that ignoring inventory costs in modelling location models may lead to inferior location solutions.