Optimization of Location of a Distribution Center for an Automobile Supply Chain System

Supply chains are of vital importance for all companies dealing with production and distribution of products. Major dealers and distributors of automobile manufacturers must manage their supply chain systems to meet the demand on time and minimize costs. In this study, we have considered a large automobile dealer and distributor company in the middle east. The company is selling luxurious cars in six countries in the middle east imported from Germany and the UK. One of the major problems they face is not being able to meet the demand on time due to storage limitations and delays in shipments received from the manufacturers. In many cases customers are lost and excess costs are incurred. The objective was to determine the numbers and locations of new storage and distribution centers so that enough quantity of automobiles was stored and distributed in the middle east to meet the customer demand during lead time. After analyzing the system and collecting all the necessary data, a linear programming model was formulated to optimize the locations, capacity, and the number of storages at minimum cost for the company's supply chain system. The model proved to be very useful in optimizing the system.