Design of Distribution Systems in Grocery Retailing

We examine a retail distribution network design problem that considers the strategic decision of determining the number of distribution centers (DC) as well as their type (i.e., central, regional, local), and anticipates the tactical decision of allocating products to different types of DC. The resulting distribution structure is typical for grocery retailers that choose to operate several types of DC storing a distinct set of products each. We propose a novel model considering the decision-relevant costs along the retail supply chain and present a case study of a major European retailer.