A centralized inventory system provides a number of stores with cost reduction, information sharing. In this paper, transportation costs are included in the inventory model. To build centralized warehouses, two things should be considered: how many warehouses are required and where these are located. The objective of this paper is to develop efficient heuristics to determine the location and the number of central warehouses by minimizing total costs. Throughout some computational experiments, the results of the heuristics are compared with an optimal solution.