Developing a market driven social housing solution with a focus on facilities location

Abstract

EmpiriQ Advisory & Support Services (Pty.) Ltd. is a company supplying consultation services for businesses operating mostly in the lower income market. This company identified the need for an alternative housing solution for lower income households. Charity and governmental organisations’ efforts have not been able to solve the housing problem experienced in the lower income sector. Furthermore, businesses supplying building materials to this market still operated from a business model that has been designed for the higher income market. EmpiriQ came to the belief that a decentralised business model would be more effective than the centralised model of a single retailer serving a large market. For this model the exact number, location and capacity of decentralised facilities required needed to be determined. The project undertaken had consequently been completed in three phases: 1. Prove of the feasibility of establishing a business in the lower income market and the viability of this market. 2. EmpiriQ’s theory of decentralised facilities has been confirmed by a case study on CEMEX, a cement supplier in Mexico. Other sources have also been utilised in order to list important features for an effective business model. 3. Finally, a mathematical model has been designed to determine the optimal solution for required facilities with regards to amount, location and capacity (customer allocation). The solution had been obtained through the use of the metaheuristic solution technique, Tabu Search. The final recommendation made to EmpiriQ was to build eight sales offices (SOs) and three cross docks (CDs). The locations of these facilities were indicated on a geographical map of the target area. Customer allocation per facility was also included in the recommendation. By implementing this solution, a maximum profit would be generated.