Issues in Distribution Center Relocation

Abstract

This paper examines distribution center relocation where a firm needs to move from a current distribution center to a new distribution center in a different location. The authors present a decision framework as well as a case study of a pharmaceutical distribution company that recently underwent a distribution center relocation. One of the major factors in determining how to accomplish this relocation is the customers’ service expectations especially if customers will not tolerate a disruption in deliveries or if they expect all product to be a single delivery. The capabilities of the firm to handle operate both distribution centers simultaneously is another consideration. Lastly, firms need to determine the cost of the relocation including transportation, inventory, and additional picking costs.