Benchmarking of Alternative Business Models in Licensed Grain Warehouses and Capacity Optimization

Abstract

There have been serious problems in optimizing capacity management due to lacking detailed analysis of the current business model in Licensed Grain Warehouses (LGW) in Turkey. Therefore, the study's objectives were to economically analyze the standard and industrialist business models and examine the capacity management optimization in LGW in Turkey. Research data were collected from managers of warehouses by using semi-structured interviews and observations. Management records of the examined firms were also used to elicit warehouse-level data. MOTAD model was used to generate a capacity optimization plan under risky conditions. Research results showed that the capacity use ratio of two different business models was nearly the same, and both had smaller capacity use ratios than that of the optimum. Inventory turnover of the industrialist business model was higher than that of the standard one (P< 0.01). The amount of loss was lower than 1% in both business models. The gross income of the industrialist business model was larger compared to a standard business model. MOTAD programming results revealed that, with government incentives and support, optimizing the storage organization in the industrialist business model increased the gross revenue of licensed warehouses by 177.27%. Ensuring the optimum capacity management would reduce the need for working capital by 21.69%. The study suggests conversion from a standard business model to an industrialist one and controlling and monitoring inventory turnover to optimize the capacity of LGW.