COST REDUCTION IN NATURAL RUBBER MILK COLLECTION

Abstract

The objective of this research is to study the problem of rubber milk collection process in the selected rubber factory. This research emphasizes on the collecting cost reduction to achieve the maximum amount of collected rubber at the minimum cost. The major cost in the collection system occurs from transportation and facility management (rubber collection centre). Strategically, in order to minimize cost effectively, the location and number of rubber collection centre should be optimally determined as distance of centre affects to transportation cost, and number of facility affects to management cost and conveniently available facility. Nowadays, the high cost of the collection centre management in the rubber factory is a challenging problem. Decision making to close unnecessary collection centre is one of the possible ways to cope such a problem. Therefore, this research aims to propose Analytical Hierarchy Process (AHP) combined with Linear Programming (LP) to help factory, farmer and entrepreneur to make a good decision in the facility management problem. After closing some collection centres, there are some amount of farmers facing with the higher transportation cost or terminating their rubber supplies. In this research, we adopt Vehicle Routing (milk-run) to minimize transportation cost to a number of farmers' vehicle and fully utilize the truck space. From our numerical experiment, we show that the optimal number of collection centre and the effective routing design can reduce cost approximately 32.4% or 1.485 Million Thai Baht per year.