Identification of transshipment center locations

Abstract

As an aid to Just-in-time production, manufacturers are demanding daily or frequent material shipments from their suppliers to their manufacturing plants. The result is an increase in the number of small shipments that are expensive to ship. Transshipment centers are necessary for efficiently transporting these small shipments. So as not to lose the Just-in-time aspects of the shipments, the transshipment centers considered are cross-dock operations without storage facilities. This paper describes a heuristic approach to determine the appropriate number and location of these centers. A case study from the automobile industry is presented. The techniques we use for our analysis require minimal data and can accomodate a wide range of facility location scenarios. They are useful for preliminary planning purposes because they provide simple, easy-to-use procedures to account for transportation objectives in facility location. Using these techniques, we not only analyze the optimal number and location of transshipment centers, but also test sensitivity of solutions to changes in key variable values. The existence of a good, sequential, strategy for introducing the centers one at a time as a network evolves over time, and the impact of constraints on facility size are also investigated.