Application of Baumol-Wolfe method on planning location selecting of automotive components manufacturing distribution center

The location selecting of the distribution center is a key factor to affact the cost efficiency of logistics distribution system. A model of the Logistics distribution costing was founded in this paper, which is based on a 5 years´ data of a large logistics distribution enterprise which is engaged in automotive components manufacturing. As the Baumol-Wolfe method says, we conduct a phase measurement at the same time when we consider the variable costs and fixed costs. The result of the measurement shows that this enterprise should use the distribute center in bejing before 2009, we should put the distribute center into use in 2012 under the demand of production. During this period, both logistics distribute centers in Beijing and Tianjin should be build and put into use by stages, this could reduce the cost of production to the lowest.