Modelling and analysis of a strategic fleet sizing problem for a furniture distributor

We address a real strategic fleet sizing problem for a furniture and home accessory distributor. The current practice in the real case is to keep the inventory of items in self-owned branch showrooms. The distributor plans to go to a new system where the inventory is centrally held in a distribution centre. In the new system, the area that the distributor serves is split into regions with their assigned group of vehicles. Showrooms in each region only showcase the products, and pass the orders to the distributor and the distributor transports the required items from the central depot to the customers directly. We propose a mixed integer linear program to determine the total number and types of owned and rented vehicles for each region under seasonal demand. We study the effects of different scenarios on cost and demand parameters, and suggest some managerial insights based on a set of numerical analysis. [Received: 16 February 2016; Revised: 31 May 2016; Accepted: 20 June 2016]