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Abstract
This paper presents the outcomes of a study of the choice of location for distribution centres in logistics operations. A conceptual framework of location selection for distribution centre is worked out through three main stages. At the first stage, a general geographical area for distribution centre is identified based on the Centre of Gravity principle, taking into consideration socio-economic factors. The second stage of the selection process involves the identification of alternative locations for the distribution centre and the airports and seaports to be used for inbound and outbound cargo flows within the defined general geographical area. The third stage focuses on specific site selection among the identified alternative locations for the distribution centre based on the quantitative approach. This involves a mathematical model which aims to optimise either the total distribution cost or the integration of total distance transport with given relevant volumes of cargo. In order to illustrate the conceptual framework, a case study of a logistics service provider will be provided. Data from the case study proved that the conceptual framework for selection is valid and can be of value to logistics companies in their operations and management.
Key words: logistics, selection, location, distribution centre
1. Introduction
During the last few decades, the term logistics has been studied with the increasing recognition about its importance to enterprises, organisations as well as the national economy. For example, a recent study carried out by Michigan State University in the USA showed that logistics alone represented between 10-15% of GDP of most major North American, European and Asian/Pacific economies (Rushton, Oxley & Croucher 2000). Part of the logistics chain is physical distribution, which describes a wide range of activities taking place after the production of goods and before they reach customers or end users. These activities include materials handling, storage and warehousing, packaging and unitisation, transportation from plants to depots/distribution centres and later to customers/final users. In fact, what physical distribution is aiming at is to 'bridge the gap between the producer and consumer' (Bensonand Whitehead 1985). If the task of marketing is to create customers' demand, then the objective of physical distribution is to satisfy them. Most of these activities take place in warehouses/distribution centres, and therefore a rationalisation of them in...