Feasibility Study and Strategic Location Modelling of a centralised distribution centre for Conways

Abstract

Facility location modelling has proven to be a unique and powerful tool in operations research. Location models are widely used to solve complex engi- neering problems across various industries. For Conways, a facility model is invaluable in determining the optimal location for their new centralised dis- tribution warehouse. This project aims to develop a facility location model to identify possible locations, given the locations of the ve warehouses, the new centre will stock. A new distribution centre will assist Conways in consol- idating these ve warehouses and order their products through one account. A single account, rather than ve separate accounts, will allow them to make better use of the quantity discounts o ered by Wispeco. Since only one account will handle the procurement, the procurement problem was also investigated to identify the best combination of purchases at the lowest possible cost. A centralised centre will ultimately provide the opportunity to improve Conways' procurement system. This report provides the problem investigation and an in-depth literature review of the procurement problem as well as the facility location model. The mathematical models used to solve both problems are discussed, along with the results. The rst model identi ed the best combination purchases in order to obtain the lowest cost. This combination will save Conways R 766 002,00 annually. The second model determined that the optimal location for a dis- tribution centre is in the Pretoria region. The Tannery Industrial Park is the preferred location.