Cost Functions in the Location of Depots for Multiple-Delivery Journeys

Most wholesale distribution is performed during multiple-delivery journeys. Mathematical methods of locating depots utilize simple functions of delivery data, e.g. weight and distance from the depot, to measure the delivery "cost"; the total "cost" is minimized to find the depot location.It is pointed out that the cost of a delivery is influenced by the occurrence of other deliveries. It is shown that, in a few examples, simple functions of the delivery data are not always good measures of variable cost, as measured by the length of journeys planned to carry out the same deliveries, and that the minimum points of the simple functions rarely coincide with the point of minimum variable cost. It is concluded that, subject to reservations, which are discussed, about the experiments, the use of simple cost functions to locate wholesale distribution depots will probably give misleading results.