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Distribution Network

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Abstract

In a typical original equipment manufacturing (OEM) system, the suppliers ship stock to one or more distribution centers, that serves as the source to a series of retailers (dealers, stores), and the retailers sell the products to the customers. This could be a network that holds service parts for an automotive corporation. The dealers sell the autos to the customers and when repair or maintenance is needed, the customer seeks service from the dealer. The dealer carries a limited supply of parts for this purpose, and relies on the DC to have a full set of parts as needed. The OEM is faced with holding the minimal amount of stock needed to properly service the demands from the dealers. In the ideal situation, the DC system consists of a network of locations that are strategically near the dealers and to some extent, near to the suppliers. One location is the master stock location that serves as the headquarters for the entire system. The other locations are branch locations. The master location is often a much larger location and holds more variety of stock. Sometimes a small location is provided and is called a 2-level-service location. This location holds minimal stock and is supplied by the master stock location. The parts that have a high amount of demand are stocked in most locations and are called distributed parts. The low demand parts are labeled as non-distributed, and are mostly stocked only from the master stock location.

Keywords

  • Network Location
  • Distribution Center
  • Order Quantity
  • Branch Location
  • Demand Location

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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  • DOI: 10.1007/978-3-319-26862-0_11
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© 2016 Springer International Publishing Switzerland

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Thomopoulos, N.T. (2016). Distribution Network. In: Elements of Manufacturing, Distribution and Logistics. Springer, Cham. https://doi.org/10.1007/978-3-319-26862-0_11

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