Research On Distribution Center Location Problem Under C2C E-commerce

A new distribution mode was proposed recently, which requires C2C companies to establish several self-owned distribution centers and get transportation service from third party logistics. The new mode is quite different from the distribution mode which C2C companies apply currently. In the current distribution mode, third party logistics take fully responsibility for all the distribution work of C2C companies. And because of the underdevelopment of China's third party logistics, C2C companies in China are now suffering development bottleneck from distribution issues. According to the setting, this paper discussed the distribution center location problem under C2C e-commerce.Firstly, the paper analyzed the necessity of the self-owned DC establishment. The current distribution mode has several shortages in the aspect of distribution efficiency, distribution capacity and warehouse management. The new mode can not only conquer these shortages, but also save more cost. Thus, it is profitable to establish self-owned DCs by C2C companies.Then, the paper proposed two operations research models for the location problem. One model will be used for the first time location planning when there are no DCs in the area, while the other will be used to plan more DCs in the area in order to solve the capacity shortage problem led by increasing demand. These two models will consider the economies of scale of warehousing and will use piecewise function to represent the scale effect.After that, an advanced algorithm was designed to solve the location problem with the economies of scale. This algorithm was based on the Efroymson-Ray branch and bound algorithm, which was an optimization algorithm for the original branch and bound.Finally, the modified algorithm was tested by several experiments and proved with accuracy and efficiency. A real distribution center location problem from taobao.com was then solved by the advanced algorithm and got reasonable solution.