Optimization Models

For a major retailer: An optimization study of the benefit of cross-docks.

A cross-dock (CD) stores no inventory, but can be a convenient transhipment point between several suppliers and multiple retail stores. Deliveries of particular products from various suppliers, destined to specific stores, are scheduled to arrive at a CD at nearly the same time. Outbound deliveries of the right items in the precise quantities for each store can then proceed on routes originating at each CD.

An optimization model was constructed to measure the benefit of cross-docking relative to that of direct shipments to stores, taking into account the differences in frequency of deliveries in the two cases. Parameters important to the cross-docking decision were identified and quantified.