Universidad Autónoma de Nuevo León

Facultad de Contaduría Pública y Administración

International Business

Operations Research

PIA

Teacher: Ernesto Alejandro Villareal Alvarado.

Group: 4FI

TEAM:
Students: ID Number:
Estefania Escamilla Tovar 2050950
Regina Pizarro Ramírez 2175373
Dafne Nohemí Ramírez Salinas 2045408
Miguel Garza Parra 2058246
Alan Gabriel Rodríguez León 2056575

Ciudad Universitaria, San Nicolas de los Garza, N.L, 03/11/ 2024.

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Introduction

A waiting line is the resulting effect in a system when the demand for a service
exceeds the capacity to provide such service. This system is formed by a set of
parallel entities that provide a service to transactions that randomly enter the
system. Depending on the system in question, the entities can be cashiers,
machines, traffic lights, cranes, etc., while the transactions can be: customers,
parts, cars, ships, etc. Both the service time and the entries to the system are
phenomena that generally have associated sources of variation that are beyond
the control of the decision-maker, in such a way that it is necessary to use
stochastic models that allow the study of this type of system.

A waiting line can be modeled as a stochastic process in which the random

variable is defined as the number of transactions in the system at a given time; the
set of values that this variable can take is {0, 1, 2, ..., N} and each of them has an
associated probability of occurrence.

The objective is to determine what level of service, either by the quantity of entities
or by their speed, to provide in order to minimize the total cost of the system. This
cost is composed of both the cost of service and the cost caused by waiting.
In this project, we will analyze and optimize OXXO's product distribution process
with its delivery trucks using the queuing theory model. Our goal is to address
specific logistical challenges, including truck wait times at distribution centers,
arrival rates on the delivery route, and vehicle service rates. Through a detailed
example of the distribution issues OXXO faces, we will present potential solutions
and analyze each one to provide a deeper understanding of the problem and offer
predictive and improvement insights for the distribution method.

Project Objective
Our primary objective is to measure and reduce the wait times of delivery trucks
along their delivery routes. To do this, we will focus on three key aspects:

1. Truck Arrival Rate: We will analyze the frequency of truck arrivals at

loading and unloading points. This parameter is critical for understanding
the demand faced by OXXO's distribution system and anticipating high-
traffic periods at distribution centers.

2. Vehicle Service Rate: We will evaluate the time spent loading, unloading,
or restocking at each store. This service time directly impacts the
responsiveness of the trucks and affects the efficiency of the distribution
process.

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3. Wait Times: Using the queuing model, we will determine how long trucks
spend waiting before they can begin service. High wait times can result in
additional costs, delivery delays, and lower store satisfaction.

Description of OXXO’s Distribution Problem

OXXO is currently facing several logistical challenges in distributing
products to its thousands of stores nationwide. These issues include:

• Truck Accumulation at Distribution Centers: During high-demand

periods, such as weekends or special occasions, truck flow becomes
intense, creating bottlenecks at distribution centers. This not only increases
wait times but also impacts overall delivery efficiency.

• Demand Variability Among Stores: Product demand varies significantly

across different stores and regions, complicating route scheduling and truck
loading.

• High Operational Costs: Prolonged wait times add extra costs, including
fuel consumption, vehicle wear, and the opportunity cost of trucks that could
be performing other deliveries.

Using the Queuing Model

To address these issues, the queuing model is an effective tool, as it allows

us to simulate and analyze situations where demand (in this case, truck
arrivals) may exceed service capacity (time required for loading and
unloading). Using this model, we can estimate:

• Average Wait Time in Queue: This tells us how long trucks spend waiting
before being serviced.

• Queue Length: This helps predict how many trucks may be waiting during
peak demand periods.

• System Utilization: We identify how much time personnel and resources

are occupied at the distribution centers.

This project will not only lead to a better understanding of OXXO's

distribution challenges but will also provide tools to predict high-demand
situations and make optimization decisions. By implementing these
improvements, OXXO could reduce operational costs, enhance delivery
times, and ultimately increase satisfaction for both its stores and customers.

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Explanation About the Company
The history of Oxxo began in Monterrey, Nuevo León, 45 years ago

OXXO is an extensive network of stores, we offer quality products and services in

a flexible schedule and with a wide coverage. Our purpose is to meet the daily
needs of our customers, simplifying their lives with reliable and practical services,
its concept is designed to meet the needs of consumers, offering proximity, 24-hour
opening hours in many stores, easy access and fast purchase. Many
establishments allow the payment of services and have ATMs expanding the offer
for our customers
We have our own brands that offer quality products at competitive prices, satisfying
basic needs, such as food and household items, and supporting the development
of local suppliers.

•Bitz

•Tikytin
•Bioleve

•Nutrapet

•Andatti

In OXXO as a 100% Mexican company and as part of the Proximity and Health
division of FEMSA, this is the Proximity Division, one of the three divisions in which
FEMSA Commerce is divided, this being the largest, representing 58% of its
revenues.
Femsa, owner of Oxxo, has a board of directors, chaired by José Antonio
Fernández Carbajal. In addition, the conglomerate of stores and brands is led by
the Chilean Daniel Alberto Rodríguez Cofré, who took office in January last year
and the general director of OXXO is Javier S. A. González, who has been involved
in the management of the chain of convenience stores

It is the third chain with the most sales in Mexico, after Soriana. In Latin America,
Oxxo is the seventh largest commercial chain by sales

The Proximity Division is made up of OXXO, Bara, and Doña Tota Stores, in
addition to OXXO GAS service stations and forms the largest network of small-
format stores in Latin America.

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Oxxo with the aim of promoting financial inclusion in Mexico, we established
strategic alliances with 18 banks and 12 popular financial companies. This has
allowed us to be bank correspondents, offering services such as transfers,
deposits and withdrawals through our payment method, Spin by OXXO, which
includes the option of obtaining a VISA card.

OXXO stands out for its strong governance structure, which promotes best
practices in diversity and expertise. We are the largest chain of convenience stores
in Mexico and Latin America, with more than 45 years of experience and more than
24,000 establishments in Mexico, Colombia, Peru, Chile and Brazil. Our goal is to
generate economic and social value in the communities where we operate,
creating employment and improving the quality of life of our neighbors.

Our commitment to key values, such as passion for customer service, innovation,
quality and integral staff development, is essential to our success. OXXO has
established itself as a reliable option for our customers, who find friendly and
efficient attention on each visit, OXXO not only seeks business growth, but also
contributes to the well-being of communities, generating jobs and offering
comprehensive solutions that positively impact society.

Strategic alliances with authorities and business organizations.

•National Chamber of Commerce

(CANACO)

•Confederation of Employers of the Republic

Mexican (COPARMEX)

•Chamber of the Transformation Industry of Nuevo León (CAINTRA)

•National Transport Association Private (ANTP)

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Current situation
As we well know, in Mexico, OXXO is an extremely popular convenience store chain
operated by FEMSA, known for being present in almost every corner of cities and
towns, offering a wide variety of basic products such as food, beverages, personal
hygiene items, phone refills, and bill payment services. OXXO has grown rapidly due
to its convenience model, extended hours, and strategic location, making it one of
the most accessible retail outlets for consumers in Mexico.

Even though it is a born leader, like any other company, it presents problems or
rather difficulties in certain aspects, in this case we will talk specifically about
distribution and logistics.

The situation focuses on improving efficiency in the delivery of products to OXXO

stores by optimizing the routes of the trucks that supply them. The idea is to minimize
both total travel time and fuel costs. To achieve this, the most appropriate routes and
schedules must be selected to reduce delivery times and operating costs without
breaking with restrictions such as the opening hours of each store and the carrying
capacity of the trucks.

With a large number of stores in urban and rural areas, OXXO needs a flexible supply
chain to ensure that all outlets are well supplied without excessive transportation and
warehousing costs.

OXXO could implement a real-time inventory management system to monitor stock

levels in each store and predict demand for efficient replenishment. It could also use
strategically located regional distribution centers to reduce delivery times, reduce
transportation costs, and improve product availability in all of its stores.

From team research, we deduce that in some ways the company itself already has
certain key points in place, as they focus on data that ensures that there are no
unnecessary surpluses or shortages of products in the stores. In Monterrey, OXXO
manages a robust logistics network that operates from two regional distribution
centers in the city, and FEMSA Proximidad, its responsible division, makes deliveries
to its stores throughout Mexico through 21 regional warehouses and a fleet of 852

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trucks. This fleet allows OXXO to make approximately two deliveries per week to
each store in the country, including Monterrey. This means that if a store receives
two weekly deliveries, the annual average per store is around 104 deliveries.

Logistics costs for OXXO are not publicly detailed, but FEMSA employs advanced
optimization and automation systems to reduce costs throughout its supply chain.
This includes optimized route scheduling and an automated replenishment system
that helps minimize logistics times and costs.

This operation in Monterrey is part of its comprehensive network that allows it to

respond quickly to demand in more than 25,000 stores in Latin America, adjusting
its logistics to specific market needs and minimizing operating costs.

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Problem To solve
OXXO, the largest convenience store chain in Latin America, faces a considerable
logistical challenge in efficiently distributing products from its distribution centers
(CEDIS) to stores in various regions. This challenge becomes especially complex
in areas with high replenishment demand, where stores depend on a constant flow
of products to meet customer needs. An optimal distribution service is essential not
only to prevent stockouts but also to reduce waiting times and ensure product
availability at all times.

Problem Analysis in Distribution

Let’s consider a specific region supplied by an OXXO CEDIS, where multiple
stores need constant replenishment. In this context, product distribution depends
on two key factors:

Arrival rate of stores on the route (𝜆): This parameter represents how frequently
stores in the region require restocking. Here, the arrival rate is 5 stores per hour,
meaning that, on average, 5 replenishment requests occur per hour in this area.
This rate reflects store demand—how many need to be serviced by a distribution
vehicle within a set period.

Vehicle service rate (𝜇): This parameter measures a vehicle’s capacity to service
stores within a given timeframe. In this case, a distribution vehicle can service up
to 8 stores per hour, which includes the time spent delivering products at each
store and traveling between stores.

The relationship between these two parameters is crucial for assessing distribution
system efficiency. Here, the vehicle’s service rate (μ=8 stores per hour) is higher
than the rate at which stores need servicing (λ=5 stores per hour), indicating that
the system can theoretically handle demand without accumulating delays.
However, this does not guarantee that there won’t be stockout issues, especially
during peak demand or if unexpected delays arise on the route.

1. Vehicle utilization represents the percentage of time a vehicle is in use. This

metric helps determine whether the vehicle fleet is sufficient to meet
𝜆 5
demand without becoming saturated. The formula is :𝑃 = 𝜇 = = 0.625
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This indicates that the vehicle is in use 62.5% of the time on this route. This
utilization rate suggests that, although the vehicle is occupied most of the
time, there is still some margin to serve more stores without an immediate
risk of saturation.

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 This means the vehicle is busy 62.5% of the time. This suggests the system
has some idle capacity (37.5% of the time), which is beneficial as it implies
the system can absorb temporary increases in demand without significant
delays.

2. The probability that the vehicle is available at a given time (that is, that it is
not servicing any store) is:
𝑃0 = 1 − 𝑃 = 1 − 0.625 = 0.375
3. Average Number of Stores Waiting
The average number of stores waiting in the queue, which have not yet
been served, is calculated as:
𝜆2 52 25
𝐿𝑞 = = = = 1.04
𝜇(𝜇 − 𝜆) 8 ∗ (8 − 5) 24
This means that, on average, there will be approximately 1 store waiting to
be supplied on this route at any given time. This value is useful to analyze
whether the waiting time is acceptable or if it would be necessary to add
another vehicle to avoid queues at the stores.p

4. Average Time in System for each Store

The average time that a store waits to be served on the route (including
waiting time and service time) is:
1 1 1
𝑊 = 𝜇−𝜆 = 8−5 = = 0.333 horas = 20 minutes
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This means that each store waits on average about 20 minutes to be served
on the distribution route. If this time is too long, OXXO could consider
optimizing the route or increasing the number of vehicles.

5. Probability of Stores Waiting

The probability that there are exactly stores on the route waiting to be
served can be calculated with:

𝑃𝑛 = 𝑃𝑛 ∗ 𝑃0

For example, the probability that there are exactly 3 stores waiting is:

𝑃3=(0.635)3∗0.375=0.0916

This indicates that there is a 9.16% probability that there are exactly 3 stores
waiting to be supplied.

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Ideas to Solve the Problem
To optimize the distribution system and reduce OXXO's waiting times and
operating costs, the following solutions can be considered based on the analysis of
the problem using queuing theory:

1. Increase the Vehicle Fleet

Description: By adding more vehicles to the fleet in areas with high demand, the
load on each vehicle is reduced and the response time is improved, since each
store would wait less time to receive its merchandise.

Benefits: This reduces the average waiting time and the probability that stores will
run out of available products.

Disadvantages: It increases operating costs, such as fuel, vehicle maintenance,

and driver salaries.

2. Optimize Distribution Routes

Description: Use route optimization algorithms (such as the "traveler" algorithm or

vehicle routing algorithms) to reduce travel time between stores and maximize the
number of stores served per hour.

Benefits: Improves fleet efficiency by allowing each vehicle to cover more stores
without adding more resources.

Disadvantages: Implementing route optimization technology may require initial

investment in software or training.

3. Analyze Demand Rate and Adjust Schedules

Description: Review historical demand data for each store and adjust distribution
schedules to meet peak demand times. For example, send more vehicles during
peak hours and reduce them during off-peak hours.

Benefits: Improves response to demand without the need to add vehicles to the
fleet. Increases customer satisfaction as stores receive products when they need
them most.
Disadvantages: Requires constant analysis of demand patterns, and driver and
vehicle schedules must be dynamically adjusted.

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Group Conclusions
Miguel Garza Parra 2058246:

In this lesson I saw how to implement the methods seen in class, in this case in the
Oxxo company. I saw the opportunities that Oxxo can have to be able to grow in
the area of distribution and to be able to solve the problems that we saw. What I
mean is that no matter how simple logistics and distribution seem, it is difficult to
maintain a margin of quality and speed. Something that caught my attention is that
no matter how many solutions or calculations we make, we will not always be able
to get the solution right and everything will depend on the conditions in which
anything is happening.

Dafne Nohemi Ramirez Salinas 2945408: OXXO, as one of the largest

convenience store chains in Latin America, faces complex challenges in training,
logistics and operational management due to its large number of locations and
rapid expansion. The training of your staff has a significant impact, since a well-
trained workforce is essential to maintain the expected level of service and ensure
consistency in the customer experience. OXXO's focus on effective training
programs allows employees to learn about inventory management, customer
service and operational procedures, thus reducing errors and improving efficiency
at the point of sale.

Estefania Escamilla Tovar 2050950: To conclude, the analysis of OXXO's current

situation in terms of distribution and logistics reveals the importance of optimizing
these processes to improve efficiency and reduce costs. Although OXXO has a
solid supply structure that includes suppliers, distribution centers and delivery
routes to its thousands of stores in Mexico, it faces challenges such as high costs
and the risk of stock-outs. By precisely defining the problem and analyzing logistics
operations, key areas for improvement have been identified, including optimal
route scheduling and the use of real-time inventories.

The proposal to apply linear programming models to solve these problems is

based on the possibility of optimizing routes and delivery times, thus maximizing
product availability without exceeding cost limits. This approach not only
strengthens the supply chain, but also allows OXXO to adapt quickly to market
demand, improving the customer experience and long-term profitability.

Regina Pizarro Ramírez 2175373: The analysis of the OXXO distribution system
highlights the importance of optimizing the logistics process to improve operational
efficiency and customer satisfaction. By modeling the arrival and service of delivery
trucks, it is evident that OXXO faces significant challenges, especially in periods of

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high demand. Congestion at distribution centers and variability in product demand
in stores can result in extended wait times and high operating costs.
The results of the study suggest that OXXO can improve its distribution system
through three key strategies: increasing the vehicle fleet, optimizing delivery routes
and adjusting distribution schedules based on historical demand data. Increasing
the fleet can reduce waiting times, although it increases operating costs. Route
optimization can improve efficiency without the need for more resources, while
adjusting schedules allows a better response to demand without fleet expansion.
Implementing these improvements could not only reduce operating costs and
waiting times, but also ensure constant availability of products in stores, improving
the customer experience. This analytical approach, backed by stochastic models,
offers OXXO tools to anticipate and manage its logistics more effectively, aligning
its operation with market expectations and the needs of its consumers.

Rodriguez Leon Alan Gabriel 2056575: In this activity we were able to realize the
importance of linear programming and how it affects large companies, or solve
their problems. This is one of the main reasons why this important knowledge
should be taken into account. an activity involving a lot of learning and, above all, a
lot of new knowledge that we can apply in our lives, perhaps not daily, but on a
given occasion we will know how to solve it.

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LINKS
https://logisticapress.com/distribucion-eficiente-la-logistica-detras-de-cada-tienda-
oxxo-en-latinoamerica/

https://thefoodtech.com/industria-alimentaria-hoy/distribucion-eficiente-la-logistica-
detras-de-cada-tienda-oxxo-en-latinoamerica/

https://www.elfinanciero.com.mx/empresas/seis-factores-clave-que-explican-el-
exito-de-
oxxo/#:~:text=Una%20log%C3%ADstica%20fuerte%2C%20rentar%20locales%20
y%20no%20franquiciar%2C,por%20encima%20de%20La%20Comer%2C%20Che
draui%20o%20Walmart.

https://www.oxxo.com/pdfs/IS_FEMCO_2021.pdf

https://www.femsa.com/es/unidades-de-negocio/proximidad-y-salud/oxxo/

https://www.webyempresas.com/ejemplo-de-la-matriz-foda-aplicado-a-oxxo/

https://www.femsa.com/es/sala-de-prensa/femsa-anuncia-transicion-de-liderazgo-
en-su-division-oxxo-mexico/

https://www.oxxo.com/quienes-
somos#:~:text=En%20OXXO%20como%20compa%C3%B1%C3%ADa%20100,co
munidades%20en%20las%20que%20operamos

https://t21.com.mx/logistica-2016-08-02-femsa-logistica-redefine-distribucion-
ultima-milla/

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