Channel Flow Optimization for Product Allocation in Grocery Retail

Supply chain networks in the retail industry have become increasingly complex, giving rise to challenges in product flow from distribution centers to fulfillment locations. Product allocation, in particular, has emerged as a critical challenge for grocery retail companies as it helps them determine the shipping location and the shipping type for every product in their portfolio. The sponsoring company for this project wants to validate their current product allocation model by determining whether the input values used for certain key factors in their algorithm are correct or not. Further, the company wants to identify whether any other factors need to be incorporated into the model. To address the problem statement, our project is focused on simulating the product allocation model with a range of different inputs and layering in relevant cost components. This helps us identify the least cost scenario and the corresponding values for the input factors. We recommend these values for running the model in the future. Using the recommended solution can result in ~12% savings in logistics cost.

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