Abstract:
This study is motivated by a real-world application of ABC (Pvt) Ltd., a well-known
FMCG (fast-moving consumer goods) industry. The industry have nine agents (in two
operating regions) from which it can serve its 5483 clients. We focus on this industry’s
outbound logistics in its two operating regions, namely Colombo and Gampaha, while
taking into account its distribution and current decentralized redistribution processes,
since additional routing costs have been identifed in the existing setup. The goal of
this study is to implement a better route plan that optimizes the truck allocation system at the lowest possible costs of transportation, warehouse, and administration. First
to determine a best location for the new facility, the gravity model is used to pinpoint
the exact location of the central warehouse. Then a centralized delivery strategy is
applied to establish a better path between the sub-clusters. The performance of this
centralized policy is evaluated on a real-world case study data. The relative cost beneft/saving (34%) of the centralized distribution system is then brought into focus and
verifed with solid statistics by comparing the overall cost of the centralized distribution
system to the total cost of the existing decentralized distribution system. Finally, we
highlight how decision-makers and policymakers in the logistics area might use our
centralized delivery strategy to reduce extra-costs, particularly during the transportation of commodities.
