AN APPPLICATION OF THE SAVINGS METHOD TO A VEHICLE ROUTING PROBLEM

Abstract

This paper presents the authors’ research study of the vehicle routing practices of a transport company.  This firm provides the delivery of Printed Circuit Board Assembly (PCBA) and electronics components to customers in the Bangkok Metropolitan Region and neighboring provinces in the Central and East regions of Thailand.  Currently, traditional truck management is being practiced: this lacks a systematic approach by using only personal experience information. The inefficient truck management problem in this case study was identified as a Capacitated Vehicle Routing Problem (CVRP).  Therefore, the ‘Savings Method’ designed by Clarke and Wright (1964) was applied to solve the CVRP, using Excel worksheets.  The method consists of four procedures.  Firstly, identify the distance matrix from the depot to all customers. Secondly, identify the savings matrix.  Thirdly, assign customers to the vehicles or routes, in which the highest value is the criteria for selection. Lastly, sequence the customers within these routes.

The research results show that the Savings method reduces the total number of vehicles usage and total distribution distances by 16.46% and 15.70% respectively, and increases truck utilization of truck capacity by 19.70%.  These results create significant cost saving for the company.