Warehouse locations are one of the most important decisions taken by logistics managers. In fact one of the main functionalities of network design software solutions by i2 and ILOG is warehouse location optimization.

I found a nice video from Mal Walker of Logistics Bureau which talks about this decision and its impacts on the bottom-line and financial performance.



In this video, he talks about drivers of cost related to warehousing and shows how lower or higher number of warehouses affect these drivers. He talks about the how transportation cost, as an example, will rise if we reduce the number of warehouse as trucks should go longer distance to reach the customers.

In general, he suggests managers to use a mix of common sense and optimization tools to find the location and number of warehouse which fits best with company's situation.