Optimal Multi-Temperature delivery frequency for small format stores

Abstract

Retailers are exploring more efficient ways to deliver to small format stores that demand frequent and small volume deliveries from Distribution Centers. The need to deliver products at different temperatures, viz. Ambient, Refrigerated and Frozen, reduces volumes that need to be delivered for each product category. One way to make delivery more effective is to use Multi- Temperature Trailers (MTT) that can consolidate demand for products at different temperatures onto a single truck, thereby reducing the number of trips and stops while delivering to small format stores. This thesis explores delivery policy options and the usage of MTT to deliver to small format stores and seeks to define an optimal strategy for such deliveries. The research compares the cost and frequency of delivery for different delivery policy options to help identify the most suitable delivery policy. Demand and distance data for a group of small format stores of a large retailer were used as inputs into the analysis. Apart from the base scenario, the analysis considers several other scenarios, providing insights that can be extended beyond the current stores and geography. In general, the analysis reveals that usage of Multi- Temperature trailers can provide significant cost and operational advantages over Single Temperature trailers for deliveries to small format stores.