Improvement of a Distribution System Using a Heuristic Method: A Case Study

Abstract

In this paper, we consider a two-echelon distribution system in Thailand. Currently, this system consists of 7 facilities, 77 distribution centers, and 928 retailers. The company would like to redesign the distribution system in order to minimize total travelling distance. The decisions for the company are 1) locating distribution centers, 2) allocating distribution centers to each facility and allocating retailers to each distribution center, and 3) assigning delivery routes for distribution centers. A mathematical formulation of this problem has been constructed. Due to the complexity of this problem, a heuristic method is proposed. The result indicates that the proposed heuristic method reduced the total travelling distance approximately 20.64% from the current plan. In addition, we investigate the effect of number of distribution centers on the travelling distance and compare the results with the solution obtained from the genetic algorithm (GA). The results show that our proposed method provides shorter travelling distance for most cases and has shorter computational time.