An extension of the goma model for determining the optimal number of depots

Abstract

To solve distribution problems, one can use either complex mathematical modeling or simple rules of thumb. The latter give approximate answers, but have the advantage of requiring only little data. In this paper we focus on one of these simple rules. We discuss a number of refinements of the General Optimal Market Area (GOMA)-model to determine the optimal number of depots serving a set of uniformly distributed customers in a particular area, The refinements concern a more precise modeling of fixed costs, of inventory costs and of transport costs. Numerical examples show that the refinements lead to different results for the optimal number of depots, notably in the case of substantial inventory and/or handling costs.