Analysis of an Applicability of Existing Approaches to the Distribution Network Design for Retail Companies

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MAGAZINE №1 (78) February 2017


CATEGORY  Retail companies’ corporate logistics Distribution logistics


The article deals with different approaches to the design of the distribution network, developed by a number of Russian and foreign researchers, and the applicability of these approaches to problems of network optimization in retail companies. The relevance of the article creates by the role that logistics plays for businesses in Retail, and the possible effect on the value of logistics costs and service levels that can be achieved with the use of modeling tools and logistics networks optimization. In the first part of the article, the problem statement and the relevance are described in detail. In the second part, the author presents a comparison of the five most wellknown and commonly used approaches to the distribution network design, using a specific set of comparison criteria. In the conclusion, the author analyzes the specifics of the selected approaches and how it can be improved in order to adapt the algorithms to network design problem in Retail. As such, the following areas of improvement are mentioned:

1. Consideration of strategic factors specific to the retail industry, which affect the design of distribution network.

2. Segmentation of the distribution network into regions, product categories, formats of trade and / or distribution channels;

3. The combination in a single algorithm of common sequence of actions for network design with mathematical optimization techniques


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