Redesigning a warehouse network

To take advantage of economies of scale, a growing number of firms have begun to explore the possibility of integrating supply chain activities. The advent of such a possibility would necessitate the redesign of a warehouse network. Typically, a warehouse redesign problem involves the consolidation of regional warehouses into a fewer number of master stocking points and the subsequent phase-out of redundant or underutilized warehouses without deteriorating customer services. This paper develops a mixed-integer programming model to solve the warehouse redesign problem. The usefulness of the model was validated by its successful application to a real-world problem and by its sensitivity analyses when used with changing scenarios within a warehouse network configuration.