SIMCON I: A Computer Based Simulation Model for Evaluating Physical Distribution Strategies Involving Order Consolidation

Abstract

Business firms selling to customers buying in small quantities are faced with the problems of rising transportation costs and record high interest rates on capital used to finance inventories and warehouses. One method for dealing with these problems is to consolidate small customer orders into volume shipments for transportation to breakbulk points located within clusters of customers. The following article describes a simulation model which has been used to evaluate the effects of major variables influencing the cost and service performance of a physical distribution system employing an order consolidation strategy.