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Managerial Decisions For Cost in Transportation: An Applying Integer Linear Programming Model
Managerial Decisions For Cost in Transportation: An Applying Integer Linear Programming Model
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distribution ([13]. Moreover, linear programming techniques have great attraction. Including
all sorts of production such as transportation, energy and telecommunication they have been
successfully used in many sector ([14]. [15] Durhan and others pointed out that minimizing
transportation cost is important in developing various pricing strategies against rival firms
during marketing activities and this is one of the main factors which is effective in improving
the general financial structure of a firm.
It is a known fact that transportation costs are important in business. Therefore many
studies related to minimizing transportation cost have been done. Among these studies an
important part is about Vehicle Rotating Problem.
Vehicle Rotating Problems are the problems of planning optimal distribution
of/storing of vehicles which are given the job of serving to geographically dispersed centres
from one or more tanks to one tanks. The issue of distribution of consumption products from
factories to wholesalers is a good sample problem for VTP, which makes the problem easily
understood. In these example factories are supply-centres and wholesalers are demand-
centres.
The studies in the literature related to this topic include modelling VRP problems with
different characteristics, using different solution algorithms in searching optimum solution for
these problems and doing application studies for the solution of problems in real life.
A problem could be defined as a difference between a present existing situation and a
satisfactorily expected situation.
This study suggests an integer linear model which fits to the amount of demands in the
problem of continuously transporting goods from a factory to many wholesalers by vehicles
with different capacities and applies the suggested model to a firm.
2
In businesses, this type of studies is meaningful as long as it meets a need or solves a
problem. In other words, It is an effort to determine the need(s) which are necessary to reach
from the present situation to the goal which is desired to be realized. Solution is an activity of
meeting the needs which are determined or and of solving the problems which are
encountered.
In this study, the Integer Linear Programming model for minimizing distribution
cost of a firm could be formulated as follows.
m n
Z min (d ij X ij ri Yi ) i = 1,2,...,m (m: the number of sorts of vehicle)
i 1 j 1
Condition of Positivity
X ij 0 and integer number Yi 0 and integer number
Here, i shows the vehicle type and j, the region to where the vehicle will
mobilize
[1] In Limit 1
The parameters used
3
aij : The time needed by an i type vehicle to mobilize to j region
It is determined.
In the general model of Integer Linear Programming, plans which fit to the distribution
plan of the firm and prepared with the special value of the firm could be made. This also
could be used a solution for the other firms that have the same or similar problem. Here, when
solving the problem for special values, the different constitution of the limits that fit to the
problems of firms shapes the general model differently.
The importance of this study is to encourage firms in Turkey to make plan at every
stage of their activities from production to consumption by using scientific techniques.
In the decision problem, which is considered here, the distribution costs of the firms
have been found as variables by using loading values of the regions to where the logistic
department of the firm delivered products and the tables of price per kg in transportation.
Moreover, the new distribution costs of products have been found in ILP model, as the
equivalent of the distribution cost of the firm, using tables of products distributed. Then the
comparison of the distribution costs has shown that the distribution cost is minimized.
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Tab. 1: Vehicles used by the firm
13 Ton 1 42 30240
20 Ton 2 24 17280
25 Ton 3 9 6480
Source: Author
5
Tab. 2a: The amount of demands by wholesalers and costs for per delivery
j
13 Ton i=1 20 Ton i=2 25 Ton i=3
Source: Author
6
Tab. 2b: The amount of demands by wholesalers
Source: Author
7
Tab. 2c: The amount of demands by wholesalers
Source: Author
8
Tab. 2d: The amount of demands by wholesalers
SEPTEMBER
19037 43266 53073 115.376 103900 236136 289660 629.696
OCTOBER
21648 49201 60353 131.202 103039 234179 287259 624.477
Source: Author
9
Tab. 2e: The amount of demands by wholesalers
Source: Author
10
Tab. 2.f: The amount of demands by wholesalers
Source: Author
11
Tab. 2g: The amount of demands by wholesalers
MONTHS Trabzon
Values were taken by being ton. Vehicles have air conditioner and 13 tons.
Source: Author
12
Tab. 3a: The cost for per delivery by being Kg and Km coming from demand centres
Source: Author
13
Tab. 3b: The cost for per delivery by being Kg and Km coming from demand centres
Source: Author
14
Tab. 3c: The cost for per delivery by being Kg and Km coming from demand centres
Source: Author
15
Tab. 3d: The cost for per delivery by being Kg and Km coming from demand centres
Tokat Trabzon
MONTHS MONTHS
Source: Author
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Using the data in Table 1, 2 and 3, the application of the model leads to the Integer
Linear Programming model shown below.
Goal Equation
January-February Monthly
Z min 143598X 11 296725X 12 62491X 13 235534X 14 136994X 15
143598X 16 41990X 17 236899X 18 140920X 19 182247X 110
296855X 111 220920X 21 456500X 22 96140X 23 362360X 24
210760X 25 220920X 26 64600X 27 364460X 28 216800X 29
280380X 210 456700X 211 276150X 31 570625X 32 120175X 33
452950X 34 263450X 35 276150X 36 80750X 37 455575X 38
271000X 39 350475X 310 570875X 311 130000Y1 200000Y2
250000Y3
13 X 11 20 X 21 25 X 31 loaing, 13 X 12 20 X 22 25 X 32 loading
13 X 13 20 X 23 25 X 33 loading, 13 X 14 20 X 24 25 X 34 loading
13 X 15 20 X 25 25 X 35 loading, 13 X 16 20 X 26 25 X 36 loading
13 X 17 20 X 27 25 X 37 loading, 13 X 18 20 X 28 25 X 38 loading
13 X 19 20 X 29 25 X 39 loading, 13 X 110 20 X 210 25 X 310 loading
13 X 111 20 X 211 25 X 311 loading
Here, the distribution cost is found by optimal solution reached by WINQSB package
program of the model. Table 4 shows the annual distribution cost of the model.
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Tab. 4: The annual cost of delivery for the Model
Conclusion
The firm we used in this study has been using its own transportation methods. It is said by the
authorities that these methods did not provide so much advantages. Therefore, to carry the
products produced by the firm from production centres to consumption centres and to reduce
the cost, our model has been suggested. As it has been seen, at the end of the application,
42.784,759 TL costs has been reduced. When these two transportation methods are compared,
it has been seen that our method is better. The distribution cost of our model has 9.56% more
advantage than the distribution cost of the firm. The limit of this study is that the general use
of this model in different conditions and in different situation of firms such as marketing and
competition can be discussed.
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References
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:Dağıtım Koşullarının Ağır Olduğu Türkiye Deki Doğu Ve Kuzey İlleri Üzerine Örnek
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MANAGERIAL DECISIONS FOR COST IN TRANSPORTATION: AN
APPLYING INTEGER LINEAR PROGRAMMING MODEL
Ahmet Ergülen – Halim Kazan
ABSTRACT
Managers in the firms are required to make several short and long term decisions. Such
decisions for small firms are generally related with stocks and pricing policies and for big
firms, such decisions are mostly related with production, investment, financing, stoking, and
pricing the stock, employment and transportation policies. The most important element of the
decision is uncertainty. As such, setting up mathematical models based on actual data to sort
out the problems plays an important role in decision making process. The aim of this study is
to set up a model to minimize distribution costs related with transportation policy which is off
particular importance for the firms that are operating in the rather competitive environment.
The results of this study suggest that financing structure of firms can be improved by using
models. This model provides an alternative to the distribution system of the firm. While the
cost results were compared with the annual solution of the model and of the firm, cost
minimization was seen in annual distribution of the products.
Key Words: MMT; ILP and LP
JEL Classification: G30
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Ek-1: Explanations for variables of Types of Vehicle and of regions to where products
delivered.
X 110 : Total numbers of delivery to Tokat by vehicles with 13 tons of loading capacity
X 111 : Total numbers of delivery to Trabzon by vehicles with 13 tons of loading capacity
Y1 : The numbers of vehicles with 13 tons of loading capacity, which will be leased
X 21 : Total numbers of delivery to Diyarbakır by vehicles with 20 tons of loading capacity
X 22 : Total numbers of delivery to Erzurum by vehicles with 20 tons of loading capacity
X 23 : Total numbers of delivery to Hatay by vehicles with 20 tons of loading capacity
X 210 : Total numbers of delivery to Tokat by vehicles with 20 tons of loading capacity
X 211 : Total numbers of delivery to Trabzon by vehicles with 20 tons of loading capacity
Y2 : The numbers of vehicles with 20 tons of loading capacity, which will be leased
X 31 : Total numbers of delivery to Diyarbakır by vehicles with 25 tons of loading capacity
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X 33 : Total numbers of delivery to Hatay by vehicles with 25 tons of loading capacity
X 310 : Total numbers of delivery to Tokat by vehicles with 25 tons of loading capacity
X 311 : Total numbers of delivery to Trabzon by vehicles with 25 tons of loading capacity
Y3 : The numbers of vehicles with 25 tons of loading capacity, which will be leased
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