Sponsor:

Wal-Mart Stores, Inc.

Research Team:

Scott J. Mason, John K. Sophambixay, Manuel D. Rossetti

Universities Involved:

University of Arkansas

Start Date:

08/18/03

End Date:

08/14/04

Summary:

The objective of this project is to determine which Wal-Mart Center Point locations need to be expanded, opened, or closed entirely in order to minimize cost, and assess whether each Center Point should ship to all locations or a limited number based on freight profiles for that part of the country and the service that can be provided.
As the world’s largest employer and Fortune Magazine’s Most Admired Company for 2003, the sponsor company utilizes a number of complex product distribution networks for various types of goods, such as general merchandise (hard lines), grocery, and imports. Currently their less-than-truckload (LTL) network consists of 16 centerpoint (CP) locations serving as consolidation points for LTL shipments to 34 regional Distribution Centers (DC). Six of the 16 CP facilities also service seven Print Mailing DCs. The current number of dock doors at the CPs range from 17 to 50 doors, with a capacity in pounds per door per week that range from 146,000 to 232, 000. All new CP facilities are built with a minimum of 50 dock doors with expansion capabilities of up to 100 doors. In the current process, all 16 CP facilities can ship to any of the 34 DCs as needed and third party consolidators are used to fill some of the voids in the east and west Coasts, where the company does not have a regional DC to co-locate with a CP.

CELDi researchers will partner with the sponsor to model and analyze the current CP network. The proposed research will involve an evaluation of the current CP network to determine current utilization levels, routing strategies, and operational procedures. Researchers propose a strategic, optimization-based study to determine the purpose and future functionality of current CP facilities, given the expected increase in demand and future construction of newer, larger CP facilities in conjunction with the company’s current five year planning horizon. The proposed research will focus on 12 months of historical demand and shipment data in order to ensure any seasonality effects are observed and properly accounted for in the analysis. The proposed research project will be divided into two phases: Phase 1: Strategic Optimization and Phase 2: Dynamic Evaluation.