2026-09-20T02:48:01Zhttps://dspace.mit.edu/server/oai/requestoai:dspace.mit.edu:1721.1/535402026-06-06T01:03:48Zcom_1721.1_7582com_1721.1_7581com_1721.1_101402col_1721.1_131023col_1721.1_101610
Stephen C. Graves.
Ortiz Duran, Sebastian
Hawks, Richard
Massachusetts Institute of Technology. Engineering Systems Division.
Massachusetts Institute of Technology. Engineering Systems Division
2010-04-07T13:38:42Z
2010-04-07T13:38:42Z
2009
2009
http://hdl.handle.net/1721.1/53540
497102474
Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2009.
Includes bibliographical references (leaf 52).
The focus of this research is creating a framework to accurately assess the benefits of hub capability in an international distribution network for fast moving consumer packaged goods. The traditional inventory centralization dilemma requires an evaluation of whether the reduction in holding costs outweighs the increases in transportation and handling costs. We developed a mixed integer programming model to determine the benefits of adding hub capability to Consumer Co.'s Northwest Latin American import supply chain. Consumer Co.'s NWLA division imports products from Argentina, Brazil and Mexico to eleven countries within Central and South America, each operating a distribution center. By adding hub capability in the Colon Free Trade Zone, our model determined that the lowest cost could be achieved using a "Hybrid" solution, where some channels flowed through the hub and others were shipped direct. This network design would result in a 4.4% reduction in annual relevant costs. A counter-intuitive revelation was the fact that transportation costs could actually decrease. Similar to airlines, carriers can sometimes offer lower rates for indirect shipments passing through a high volume transit point instead of shipping the product directly through a less traveled route. Hub capability in the Colon Free Trade Zone also provides Consumer Co. with the flexibility to tailor their supply chain to potential changes in the fluctuating Latin American environment. Increasing customer expectations can lead to scenarios with higher safety stocks, for which centralization can provide the highest benefits.
by Sebastian Ortiz Duran and Richard Hawks.
M.Eng. in Logistics
52 leaves
eng
Massachusetts Institute of Technology
M.I.T. theses are protected by
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http://dspace.mit.edu/handle/1721.1/7582
Engineering Systems Division.
Analysis of an international distribution hub for fast moving consumer goods
Thesis
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<Abstract>The focus of this research is creating a framework to accurately assess the benefits of hub capability in an international distribution network for fast moving consumer packaged goods. The traditional inventory centralization dilemma requires an evaluation of whether the reduction in holding costs outweighs the increases in transportation and handling costs. We developed a mixed integer programming model to determine the benefits of adding hub capability to Consumer Co.'s Northwest Latin American import supply chain. Consumer Co.'s NWLA division imports products from Argentina, Brazil and Mexico to eleven countries within Central and South America, each operating a distribution center. By adding hub capability in the Colon Free Trade Zone, our model determined that the lowest cost could be achieved using a "Hybrid" solution, where some channels flowed through the hub and others were shipped direct. This network design would result in a 4.4% reduction in annual relevant costs. A counter-intuitive revelation was the fact that transportation costs could actually decrease. Similar to airlines, carriers can sometimes offer lower rates for indirect shipments passing through a high volume transit point instead of shipping the product directly through a less traveled route. Hub capability in the Colon Free Trade Zone also provides Consumer Co. with the flexibility to tailor their supply chain to potential changes in the fluctuating Latin American environment. Increasing customer expectations can lead to scenarios with higher safety stocks, for which centralization can provide the highest benefits.</Abstract>
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