In 2017, a global manufacturing company needs to re-consider the Distribution Center Planning due to significant change on the transportation regulation in China. The number of the direct clients has increased drastically. The existing network can no longer fulfill the demand and the Supply Chain team needs to find a quick solution to adjust the network in the country to meet the current demand as well as plan for various scenarios for the strategic growth for the next 10 years.
A linear programming model was built to determine the number and locations of distribution centers, balancing the following factors:
- Delivery lead time (1 day, 2 days, 3 days)
- Service level
- Total supply chain cost
Value from Optimization
With optimization, the user is able to facilitate the fast response to the market change, build up the quantitative decision support system for strategic planning process. It brought in clarity and transparency in the decision process also flexibility of adapting new changes in the coming future.