DISTRIBUTION OPTIMIZATION MODEL: A CASE STUDY OF MOBILE HANDSET DISTRIBUTION SYSTEM

Abstract

The objective of the paper was to develop a decision-making tool that a mobile handset distribution company could use to derive a more efficient and effective distribution of handsets to its channel. The paper developed the problem definition, the formulation of the LP model, and the procedure designed as a solution to the problem, and the outcome as benefits to the company is presented. A linear programming model is formulated that can be solved using commercial software. This paper demonstrates the potential for using linear programming in managing large-scale transportation and distribution problems. The model resulted in the creation of new metrics for measuring the performance, the model will help the company understand conditions that result in inventory shortages, and the model led to the discovery of inefficiencies in the company's distribution strategy. The model is directly beneficial to any company in mobile handset distribution. With a large proportion of handset sales accounted for by online retailers direct to customers, the distribution of handsets not only defines the cost but also customer satisfaction by managing delivery time and return-of-handsets offers. The model is also applicable for cases in other industries that operate in multiple markets and have a large variety of Stock Keeping Units (SKUs).