Modern supply chains heavily depend on warehouses for rapidly fulfilling customer demands through retail, web-based, and catalogue channels. The traditional approach that considers warehouses as cost-centers has affected the profitability of numerous supply chains. A lack of synchronization between procurement and allocation decisions causes warehouses to scramble for resources during peak times and be faced with under-utilized resources during drought times. Warehouses, however, have emerged as service-centers and it is imperative that warehousing decisions be an integral part of supply chain decisions. In this paper we propose a mixed-integer programming model to integrate warehousing decisions with those of inventory and transportation to minimize long-run distribution cost. Preliminary experiments suggest a sizeable reduction in the level and variance in the warehouse workforce requirements. A cost savings ranging between 2-6% is also realized
