Optimizing the Transportation cost Using Mixed integer linear programing under constraints for fizzy drink industry

Abstract

In the recent years, companies are being faced with an environment full of competition and pressure to minimize their sourcing and procurement cost, production cost, inventory management cost and logistics system cost meanwhile achieving the commendable levels of customer satisfaction. Warehousing and Distribution System is one of the most important echelons in the supply chain of any company. Therefore in the process of optimizing supply chains, Distribution echelon should be given a lot of attention as it is one of the highest money consuming echelons in the supply chain of any company. Supply chain network (SCN) design having multiple echelons and multiple products for a fizzy drink industry is considered in this research thesis. The SCN consists of plant/plants where the products are manufactured as well as a number of first marketing warehouses (FMW) at different locations where the final product is stored and then transported to distribution centers (DC) all over the region from where the product is made available to a number of customer zones. Based on different decisions to be determined like number of warehouses, location and capacity of warehouses, the number of distribution centers, location and capacity of the distribution centers and the method of transportation of products; the entire system is modeled as a mixed integer linear programming optimization problem. The objective is to minimize the total annual cost of transporting products from one echelon to another and also to develop a graphical user interface so anyone can solve even the most complex and large-scale problems by just plugging in data values and obtaining the results. A well designed Distribution Network can result in a company winning a competitive advantage over its competitors.