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Sales Territories Design (SaleTerrDsgn.lng);
We want to group customers into territories or regions so that:
1) The sales potential for each region is similar that of others,
2) The workload of each region is similar to that of others,
3) Each region is fairly compact so the sales rep assigned to a region does not incur a lot of travel time.
The simplest estimate of sales potential of a customer is past sales.
The estimated workload of a customer is the estimated hours per week that the sales rep should spend with the customer. One measure of compactness of a region is the sum of the distances of all customers from the most central customer of the region. A simple measure of distance is the straightline distance based on the latitude and longitude of each customer.
Qualitatively, the model is:
Minimize the Maximum distance from centroid over regions, subject to:
Workload in each region <= target workload,
Sales potential in each region >= target sales potential;