Abstract
Merging two independent distribution systems into an integrated whole poses significant challenges and opportunities for managers. Not only must they analyze the trade-offs among facility, inventory, and transportation costs, but they must also consider customer-service issues. We developed an optimization-based decision support system (DSS) for designing two-echelon, multi-product distribution systems and applied it to a problem facing DowBrands, Inc. The DSS provided valuable insight into the problem's cost and service trade-offs. Savings in logistics arising from its application are conservatively estimated to be $1.5 million per year.
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