The Design of a Distribution Center with Value-Added Operations

Abstract

A distribution center that services value-added operations in addition to its normal operations faces a design problem: How to configure the forward/reserve departments for both of these operations. Analytical models are developed to analyze the tradeoff between floorspace and labor efficiency. Our results indicate that the best distribution center design is dependent on a companyâ s customer demand profile as well as the relative cost of floorspace and labor.