Multi-objective Design of Balanced Sales Territories with Taboo Search: A Practical Case

Document Type: Research Paper

Authors

1 Faculty of Engineering, Universidad Panamericana, Zapopan, Mexico

2 Faculty of Computer Science, Benemerita Universidad Autonoma de Puebla, México

3 Popular Autonomous University of the State of Puebla, A.C., Postgraduate Department of Logistics and Supply Chain Management, Puebla, México

4 Autonomous University of Hidalgo, Campus Sahagun, Tepeapulco, Hidalgo, Mexico

Abstract

Sales territory design is an important research field because salesforce allocation within territories impacts sales organization effectiveness and customer service. This work presents a novel multi-objective model for re-designing sales territories with three main objectives: sales balancing, workload balancing, and geographic balancing. To measure sales and workload balancing, the variance among territories was calculated. The metric considered for geographic balancing was the sum of the distances from every salesperson to their assigned customers. A metaheuristic algorithm based on Tabu search was developed to solve a weighted aggregate function that integrates the three objectives. The algorithm is embedded in a procedure to systematically change the weights in the aggregate objective function to produce an approximate Pareto front of solutions. The algorithm was tested with instances based on data from a company in Mexico, providing salesperson-customer assignments that can be projected in territories in geographic information systems. The algorithm converges very fast for the instances studied and produces a Pareto front efficiently. Comparing the current situation of the company to a dominating solution obtained with the algorithm in the Pareto front, a significant improvement in the balance is achieved, in the order of 42.0 - 47.1% on average in the three objective functions. Another managerial benefit achieved by the company was a better understanding for the top managers of the salesforce, the customer preferences, and the challenge of serving a large and dispersed market.

Keywords


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