Date of Award

12-2015

Degree Name

MS in Industrial Engineering

Department

Industrial and Manufacturing Engineering

Advisor

Tali Freed

Abstract

This thesis proposes a model for selecting between insourcing logistics for local distribution and outsourcing these functions to a third-party logistics (3PL) company. Supply chain optimization, as well as global supply chain management, are topics that are now well-covered; local distribution, despite its integral function in an organization, is much less researched. Models exist for network design and optimization, but the practical application of these network models may call for decisions and considerations that are not covered in these optimization models.

A breakeven analysis selection model between using in-house logistic system and 3PL is derived, considering various regional parameters. The model is subsequently tested with sample parameters. Using this system as a basis, the thesis then moves on to analyze the potential of employing in-house logistics where, based on client density, outsourcing to 3PL is initially thought to be more cost-efficient.

The proposed model can be used for the evaluation and selection of logistics systems. In addition, the model can be used for decision making regarding inventory decentralization.

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