The Optimal Selection of Distribution Model with Mixed Integer Programming: A Case Study of Beverage Distribution Firm
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Abstract
The selection of suitable product distribution model leads to the reduction of transportation costs. This research aims to study the suitable product distribution model with the application of a mixed integer programming model. Data from business partners of 30 distribution business cases in the Northeastern region was collected and analyzed by the mixed integer programming model. The LINGO 11.0 Program was applied together with the analysis of low transportation costs, including fuel cost, storage cost, truck driver wage, depreciation cost, and truck maintenance cost. The results showed that the problem of product distribution was that of NP-hard problem because there were multi distribution centers, multi customers, and multi-truck sizes. The researcher therefore proposed the proper distribution model by the application of the mixed integer programming model. The experiment was conducted with five sets of data on real production demand of the case study business. It was found that the generated mathematical model was accurate, which enabled the case study business to select the suitable beverage beverage distribution model. As a result, the transportation costs decreased by up to 72.85 million baht per year or 58.90 percent.
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