Optimization Model of Truck Utilization to Minimize Outbound Logistics Cost

Abstract

The increasing market trend in the FMCG industry in Indonesia causes an increase in the volume of goods that must be sent to customers. Along with the increase in the volume of finished goods to be sent, it is also required a greater logistics activities. However, with high logistics costs, companies must increase efficiency to be able compete in the global market. Therefore, it is necessary to plan outbound logistics activities that regulate the movement of finished goods from the factory to the customers. This study developed a mathematical model to minimize outbound logistics costs based on Mixed Integer Linear Programming (MILP) approach, translated into computer model using Lingo 17.0 programming language, and solved with branch and bound algorithm. Outbound logistics costs include storage cost, handling cost, truck cost, and shuttle cost. The results of this 12-period study shows that the total outbound logistics costs decreased, compared to the previous total outbound logistics costs with an average of 39.76% for each period. In addition, this model also shows an increase usage of large capacity trucks so that the number of trucks decreases by an average of 39.10% for each period and truck utilization increases with an average of 15.21% for each period.