Athletic apparel companies outsource apparel manufacturing to many factories that pack in varied sizes and quantities. Packaging is a critical, early step in retailers’ supply chains. Pack quantities impact downstream supply chain costs. Optimizing the relationship between pack quantities and downstream costs allows retailers to reduce unnecessary repackaging within their local distribution centers. This research created a discrete optimization model aimed to minimize distribution center costs as a function of pack sizes. As sales orders trend lower due to an increase in e-commerce sales, the optimization model suggested decreasing pack sizes to accommodate these trends and decrease the variation in pack sizes across product classifications. Immediate implementation would result in a 13.2% reduction in repackaging costs. After implementation, communication with customers to match sales orders to pack sizes would result in a 39.2% reduction in repackaging costs.
MIT Department
Sloan School of Management
Massachusetts Institute of Technology. Department of Civil and Environmental Engineering
