IDENTIFYING WAREHOUSE LOCATION USING HIERARCHICAL CLUSTERING

Abstract

Identifying the optimal warehouse location involves a series of qualitative and quantitative factors. The purpose of this study was to use hierarchical clustering to identify the optimal location for a warehouse, which would ensure the lowest cost, a high level of quality in supplying customers and connect the selling and purchasing activities of the businesses operating in the Slovenian automotive industry into a system. The study also aims to demonstrate the applicability of the selected method for identifying warehouse locations in more demanding cases because the very process of identifying a location is dependent upon a company's logistic strategy. The advantage of the method used in this study is that it enables the user to use a combination of the data that is the most important for a company in a given period as well as consistent with the company's chosen business strategy.

Keywords

• warehouse site selection
• automotive industry
• hierarchical clustering