Inventory and transportation planning in the distribution of fine papers

Barber Ellis Fine Papers (BEFP) is a Canadian distributor of about 10000SKUs to several thousand small or medium-sized firms in the printing and graphic arts industries. A considerable increase in sales is anticipated over the next few years, requiring BEFP to make some important policy decisions in inventory, warehousing and transportation. Two methodologies were employed in the present analysis. First, a spreadsheet model was used to simulate several particular inventory/distribution alternatives, e.g. the present decentralized system and a system based on a national distribution centre. Secondly, linear programming was used to obtain the best system alternative, consistent with constraints on capacities, demands, etc. Details of the methods, the results and conclusions are given. Relative merits of simulation and optimization models for this type of inventory/distribution problem are noted, and suggestions are made for further research.