MILK-RUN TRANSPORT COST REDUCTION IN AN AUTOMOTIVE COMPANY IN THAILAND USING INTEGER LINEAR PROGRAMMING

Abstract

This company case study aims to improve the transportation performance by decreasing the total transportation cost in the focus supplier’s milk-run route. During process improvement in 2016, the company case study implemented a Clarke and Wright Saving Algorithm to reduce the total distance between a manufacturer and suppliers. However, this produced transportation distances greater than the original designed route. Thus, this was not an optimal solution to reduce the total distance and transportation cost. Therefore, this research paper tries to find the most appropriate optimization model to solve the cost problem enshrined in the total distance of milk-run routes. The optimization model in this research is performed using an integer linear programming, which is formulated by implementing the Traveling Salesman Problem (TSP) concept. The final result revealed that the transportation distances after using the integer linear programming method produces a greater reduction than implementing the Saving Algorithm, with a reduction of 4.72% or 3,359 THB/month. Therefore, the integer linear programming is a useful method for solving a vehicle routing problem.