A milk run transportation system for a large-scale network of suppliers and factories

Abstract

At present, Thailand's industrial segment is growing rapidly. Many strategies have been used by factories to gain the competitive advantage. One of the most commonly used strategies is cost reduction, and the major cost needed to be reduced is transportation cost. Hence, many big and high bargaining power factories have applied the Milk Run System to operate their transportations. On the other hand, small factories have hired a third party transportation provider to collect required materials for them. Thus this research developed the systems, the vehicle estimation system and the routes planning system, with an objective to help the provider handing over their services to the customers efficiently.

The vehicle estimation system aims to determine the number of needed contract vehicles beforehand for satisfying the transportation requirements of the upcoming year with low total service cost. The expected value concept is applied in the estimation system. Moreover, this research also develops the routes planning system to plan the routes for serving serve customers efficiently. The planning system applies the column generation and layer shortest path concepts to create routes.

From the result of the experiments, the proposed systems improve the provider’s transportation cost significantly, and also emphasize the effect of the united system consideration. As a result, the interested providers could apply the research ideas and concept together with some configurations to fit in their business.