Ship-pack optimization in a two-echelon distribution system

► Motivated by a real problem of picking the right ship-pack quantity for a major retailer. ► These ship-packs include cases, inners (packages of 6 or 8 units) or individual units. ► We developed a cost model that balances DC handling costs, store handling costs and inventory-related costs. ► By changing ship-pack size for 30 SKUs, total cost is reduced by 0.3-0.4% (out of a sample of 529 SKUs). ► Most of the cost savings occurs at the DC level.