Determining the optimal number of depots in a physical distribution system according to market characteristics

This paper is an extension of an earlier paper to investigate the interactive effects of location, price and demand using mathematical models of distribution systems.The paper considers the additive nature of solutions to depot location problems and shows how this property can be used to advantage in determining the optimal number of depots in a distribution system. The importance of using marginal profit and marginal return on investment in this context is demonstrated.The sensitivity of the results to changes in cost parameters is also discussed.