Doctoral Dissertations

Date of Award

6-1986

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Business Administration

Major Professor

Frank W. Davis Jr.

Committee Members

Gary N. Dicer, C. John Langley Jr., Oscar F. Fowler

Abstract

Although extensive attention has been given to the use of break bulk terminals and distribution centers, little attention has been given to the use of consolidation centers for reducing acquisition cost and regulating the flow of inbound materials. The control of acquisition cost and the regulation of inbound flows are fundamental to just-in-time manufacturing, meeting foreign competition, and the design of more imaginative and cost-effective transportation strategies now available under relaxed governmental regulation. This study used the following:

1. an inbound data base of approximately 6,000 actual shipments received by a large mail order and catalog merchandiser;

2. actual transportation rates provided by an on-line rating service; and

3. a simulation model to examine the impact of key consolidation decisions on acquisition cost and customer service.

The key consolidation decisions included: (1) number of consolidation centers, (2) area served by the consolidation center, (3) strategy for release of consolidated shipments. (4) mean shipment weight, and (5) vendor concentration. Model outputs include variables such as total acquisition cost, transit time from supplier to final destination, variation in transit time, and vehicles arriving at destination center. Simulation ranges included single and multiple consolidation centers, consolidation radius varying from 100 miles to 200 miles, release strategies varying from 1 to 7 days and various shipment sizes and vendor concentrations.

Although this research was based on a specific data set for a specific organization, it does present a methodology and programs for simulating flows from other organizations, and results showing the impact of each of the consolidation decisions on cost, transit time and variation in transit time. Based on this data set one day holding time tended to be more expensive than direct shipment, but cost decreased with longer holding times. As can be expected, consolidation becomes more effective as vendor concentrations within the consolidation area increases. Vendor concentration was the key factor for a consolidation program to be cost-effective in a just-in-time environment. Delivery time generally decreased with consolidation. Delivery time variability was heavily influenced by vendor concentration.

This dissertation makes three major contributions:

1. It illustrates the effect of consolidation parameters on cost, delivery time and variability of delivery time for a given organization;

2. It provides a framework for management consideration of an inbound consolidation program;

3. It provides a model and methodology that can be used by other organizations to analyze data sets specific to their organizations.

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