International Conference on Logistics Engineering, Management and Computer Science (LEMCS 2014)

Based on Gravity Method of Logistics

Distribution Center Location Strategy
Research
Zhao XueYing
College of Electronic and Information Engineering
Shengyang Aerospace University
Shengyang China

Abstract—In the traditional logistics center location model, Domestic logistics center location research starts
mostly assumptions that are involved in the logistics system relatively late, only more than 10 years of history; many
of inventory costs, transportation costs, demand, scholars have carried on the thorough research on it, and
transportation time, and other key factors as the known made achievements in theory and in practice. The domestic
constant, and then based on the required one or more study on the third type of logistics center location method
logistics center. But in practice, some influence logistics is relative less, mainly the in-depth analysis on site
center location factor is not certain, such as geography, selection influencing factors in the planning and layout of
economic factors, environmental factors, the transportation logistics parks.
time by traffic influence to wait, thus formed the location of
the logistics center uncertain environment. In the complex II. OVERVIEW OF LOGISTICS DISTRIBUTION CENTER
logistics system design, should these uncertain factors into LOCATION
consideration.This paper introduces the logistics center and
outlets of the layout of the relevant concepts; This paper
A. Basic concept of logistics center
illustrates the theory of gravity method under the guide of
the logistics center location method, which tells the story of "Logistics Center" is a new concept mainly used in
the development of the method of gravity, advantage, the academic and corporate circles in Asian countries and
basic principle and application of the analytic hierarchy regions, such as China, Taiwan, Japan, etc. The concept of
process (ahp) basic steps; Focuses on the actual site selection Logistics Center has broad sense and narrow sense. The
factors, the model is built and the solving algorithm and will broad sense of Logistics Center includes harbor, freight
last a gravity method is applied to an example in, find out station, transportation warehouse operators, public
the best logistics center address is effectively, accord with the circulation commodity distribution Center, logistics
actual situation. facilities owned by the enterprise; the narrow sense focuses
Keywords-Logistics center; Location; Gravity method; on the management efficiency of logistics and behavior.
Logistics planning B. Principle of logistics distribution center location
Logistics center location process should comply with
I. RESEARCH STATUS OF LOGISTICS DISTRIBUTION adaptive principle, harmony principle, economy principle
CENTER LOCATION PROBLEMS AT HOME AND ABROAD and strategic principles.
A. Research status of logistics distribution center C. Main methods and types of logistics distribution
location at abroad center location
The foreign study of logistics center location problems 1) Types of location
has a history of more than several dozen years, and In recent years, with the rapid development of the
remarkable achievements have been made both in the location theory, various kinds of site selection emerge in
aspect of theory and practice on all types of logistics center endlessly. Especially the development and application of
location selection problems; many feasible models and computer technology, promotes the development of
methods have been formed. Sum up, the logistics center logistics system location theory, and provides a powerful
location can be divided into three categories: tool for analyzing the feasibility of different scheme. But
The application of continuous location; the present theoretical method of location in general has
The application of discrete location; the following categories:
The application of Delphi expert consultation method a) Operation method
location. Operation method is the method of using mathematical
So, the above methods are often effective for limited model for logistics network distribution.
optional location, but enough basic data needed in the
b) Expert advice method
research of logistics center location taking the whole city
Expert advice method is to ask for information from
system as the research object, in which quantitative
experts, to consider the social environment and the
analysis is supplemented, otherwise it’s lack of convincing.
objective background of location object using expert
Research status of logistics distribution center location at
knowledge and experience, and to visually seek its
home

© 2014. The authors - Published by Atlantis Press 584

characteristic and law of development of location objects D. Affecting factors of logistics distribution center
and make the choice. location
c) Simulation method There are many factors affecting logistics center
Simulation method is to denote practical problems via location decisions, which can be summarized in three
mathematics method and the logical relationship and then aspects as enterprise internal factors, external
determine the best layout scheme through simulation environmental factors and logistics cost factors.
calculation and logic. The advantage of this method is 1) Enterprise internal factors
simple, and the disadvantage is that choosing this method Enterprise internal factors include two aspects of
for location selection, analysts must provide scheduled corporate strategy and product technology. The influence
various network groups for analysis and evaluation, and of enterprise internal factors mainly reflects that the
find the best combination. enterprise competition strategy has important effect on
2) Typical methods for logistics center location logistics network design. Production cost oriented
decision enterprises tend to layout production facilities at the region
a) single-point logistics center location method with lowest cost, in order to reduce the enterprises
Single-point branch location refers to the problems of production cost.
single logistics facilities location in the area of the 2) The diversification of transportation mode and the
planning, which mainly includes the following ways: development of transportation
b) Cross median method Single transport may not need the goods in the
conversion between the means of transport, when various
Establishing logistics facilities in the city is unlikely to transport, such as the planes, trains, automobiles, ships and
various means of transport integrate together, the goods in
choose without restriction, and it’s possible to choose one the conversion between the transport makes logistics
location along the overlapping streets. Cross median model business increasingly complex.
3) Factors of the development of road traffic
is a single facility location method using urban roads The development of highway greatly shortens the
network as the location scope. duration of the goods transport; more and more choose
road when transportation within 1000 kilometers. The
c) Factor-rating method United States built the national highway system in 1930s,
Factor-rating method is to determine several major factors which changed the logistics nodes or the logistics center
from all the work to be evaluated; score each factor layout. Many small warehouses disappeared, replaced by
according to the standard and determine the corresponding logistics center distributed in transport hub and edge of
level based on the total scores. city with advanced equipment and high turnover rate.
d) Analytic hierarchy process 4) Factors of reducing logistics cost
Logistics network layout problems are not only Competition and the pursuit of high profits force firms
optimization of minimizing transportation cost. It involves to reduce their logistics costs. When the market
many levels, such as economy, society, environment, competition pressure is not enough, manufacturers,
shipping channel network, which requires comprehensive warehouses and owners of transportation are relatively
analysis and evaluation. When several alternatives are independent of each other, however, with the gradual
selected, analytic hierarchy process can be used to select increase of pressure from market competition, the three
the optimal solution. discover that they must closely cooperate to reduce
3) Multipoint logistics center location logistics cost.
a) single product location method III. LOGISTICS DISTRIBUTION CENTER LOCATION BASED
Theory of single product location mainly solves ON GRAVITY METHOD
problem by selecting a number of locations from a set of
candidate locations as the logistics facility network (e.g., There are lots of ways for logistics distribution center
distribution center), minimizing the total logistics location research, but still need to be supported by
distribution cost or transportation costs and maximizing scientific modeling and quantification method, which can
the efficiency of logistics operation when carrying the be roughly divided into two major categories of qualitative
same product to a number of customers from a number of and quantitative. Qualitative method is mainly to combine
known resources (e.g., factories) going by the facility analytic hierarchy process and fuzzy comprehensive
network (distribution center). evaluation for index evaluation of various schemes, and
find out the optimal address; quantitative method is mainly
b) Multi-product location method divided into two categories of continuous model and
Selecting a number of locations from a set of candidate discrete model. The representative of continuous model is
locations as the logistics facility network (e.g., distribution gravity method.
center, warehouse, etc), minimizing the total transportation
cost and maximizing the efficiency of logistics operation A. Basic concept of the centre-of-gravity method
when carrying the multi-product to a number of customers The centre-of-gravity method is a method of setting a
from a number of known resources (e.g., factories) going single workshop or warehouse; the main consideration of
by the facility network (distribution center, warehouse, this method is the distance between the existing facilities
etc.). and traffic volume of goods, which are often used in the

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selection of intermediate warehouse or distribution n n

warehouse. H   Ci Wi  d ( A, P)   Ci Wi  k ( Xi  a)2  (Yi  b)2

The center-of-gravity method is a kind of simulation i i 
method. This approach treats demand point and resource Our final decision of distribution center location, the
point in the logistics system as the logistics system coordinate, should make the above equation H get the
distributed within the scope of a plane. The demand and minimum and that is the unencumbered minimization
resource of each point is respectively regarded as the problem in mathematics. In concrete terms, find the partial
weight of the object. The center of gravity of object system derivatives of the new distribution center; the other two
is regarded as the optimum set point of logistics node, partial derivatives function is zero, so the expression of a
determining the position of the logistics network by and b is:
finding the center of gravity of the object system. n

The center-of-gravity method is generally applied to  Ci  Wi  Xi / d

a  i
n
unitary network layout. Unitary network distribution refers  Ci  Wi / d
to the problem of setting the only logistics network in the
i 
n

planned area. In the circulation field, multivariate network  Ci  Wi  Yi / d

b  i
n
layout problems are more than the unitary network layout.  Ci  Wi / d
i (4)
B. Basic principle and step of center-of-gravity method Of which: the value of a,b is the coordinate of optional
1) Assumption terms of center-of-gravity method location facilities;
The center-of-gravity method mainly solves the Xi,Yi is the coordinate of given supply point and
logistics network planning problems generated by the demand point.
transport flow from a starting point to an end point. The C. Solving steps of center-of-gravity method
decision-making basis of the center-of-gravity method is
Step 1: find the given coordinate of supply point and
the product transportation cost minimization, which
demand point, the traffic volume and line transport rate
involves the following four assumption preconditions:
Step 2: ignore calculated value d (A, P), make d = 1,
The demand of decision points is not the actual demand
and work out the initial coordinates of optional location
geographically, but an aggregation which brings together
according to the formula (3) and formula (4).
numerous demand scattered in some area. n

The logistics costs of product distribution are expressed  Ci  Wi  Xi

in the form of transportation costs, and transportation costs a 0
 i
n

of product is only in direct proportion to the straight-line  Ci  Wi

i (5)
distance between distribution center and demand point, n

without considering the condition of city traffic.  Ci  Wi  Yi

Take no account of the cost difference caused by b 0
 i
n

different geographical position of distribution center, such  Ci  Wi

as land use fee, construction fee, labor cost, inventory cost,
i (6)
etc. Step 3: according to (a0, b0), work out d, and put aside
Take no account of the future benefits and cost variations the proportion coefficient k;
of enterprise operation, and ensure a relatively static Step 4: work out the correction of (a, b) by substituting
decision-making environment. d into formula (3) and formula (4);
2) Concrete model of the center-of-gravity method Step 5: according to the correction of (a, b), recalculate
Determined by the above four assumptions, the only d;
decision-making factors of center-of-gravity method is the Step 6: repeat step 4 and 5 until the change of (a, b) is
transportation cost in the process of product distribution, as less than the predetermined error range;
long as the location of distribution center to minimize Step 7: calculate the total transportation cost according
transportation costs is reasonable and optimal. to the best coordinate values obtained.
Assuming that the new distribution center is P;
corresponding position coordinates is P (a, b); demand IV. CONCLUSION
point is A (Xi, Yi) (of which i= 1, 2, 3……n); the distance In the logistics system, logistics center location is a
between distribution center P and demand point A d (A, P) strategic important issue in the optimization of logistics
is as follows: system. The importance of logistics center location as the
d ( A, P)  k ( Xi  a)2  (Yi  b)2 nodes of logistics network stands in the breach. Because
(Of which, k is a the modern logistics theory research in China is relatively
proportionality coefficient) (1) lagging behind the need of logistics practice, most of
logistics enterprises make assumed decisions only by
In the distribution chain, if the product needs to be experience in the logistics center location, or only paying
transported between distribution center P and n demand attention to short-term benefits, which not only go against
points (A1, A2, A3,..., An), and the traffic volume between the long-term development of the enterprise, but also cause
them is (W1, W2, W3,......, Wn) separately, given the great waste of resources. In this paper, starting from the
transportation charges from distribution center P to logistics center location, influence factors and the required
demand point :Ci, the total fee H: data, this paper established a logistics center location
model, and analyzed the priority of candidate location with

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analytic hierarchy process method combined with the
examples.
Solving the above realistic problems is extremely
helpful to resolve the problem of logistics distribution
center location, improve the service quality of logistics
system, reduce the operating costs of logistics system, and
finally play a big role in promoting the progress and
development of human society, which must be a long
process of development.
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