Analyzing Cost To Serve computation: model and application in a service sector

A new quantitative Cost To Serve computation model is here developed and the results of its application in a real case highlights that the distribution network management may achieve great benefits by correctly allocating transportation and inventory costs to delivery points and identifying critical costumers at the same time. Each supplied delivery point, in fact, differently contribute to the construction of the overall Cost To Serve. The purpose of this work is to provide an easy-to-use methodology that may both quantitatively assess the effects of the daily transportation decisions and optimize medium-term shipping strategies.