Modelling Transportation Problems And Distribution Cost Of Sachet Water

Description

ABSTRACT

This study models transportation problems and distribution cost of sachet water in a water producing company in Edo State. The specific objectives were to: investigate the shortest route that minimizes the cost of distribution from the factory to their respective distribution channels; and examine the determinants of distribution cost of sachet water in the water producing factory. The study area is restricted to Notre Dame Industrial Company, Edo State, Nigeria. Data were obtained from distribution Department of Notre Dame Industrial Company. Data on the distribution cost are extracted from the distribution file of the Company. The distribution cost covers the summation of: fuel cost per truckload, maintenance cost per truckload, loading/off-loading cost per truckload, and personnel cost per truckload. Six (6) distribution outlets namely: Ujemen, Ihummudumu, Emaudo, Opoji, Eguare and Ehuakhuala regions of Ekpoma, Edo State were selected in the study. These distribution regions are daily supplied bags and packs of table water. The data collected were analyzed using the transportation linear programming model and the Ordinary Least Squares (OLS) regression analysis. The optimization (minimization) of the distribution cost of distributing water products from the company to the various distribution/ sales outlets was done with the transportation linear programming model using Least-Cost Method (LCM). On the other hand, the Ordinary Least Squares (OLS) regression analysis was used to estimate the coefficients of distribution cost determinants. The result of the model shows a minimum cost of N425,750 (approximately 2838bags at N150). This explains that by using the least cost method, a producer can minimize cost (production/ transportation) problems to N425,750 and still be able to deliver maximum supply to all its buyers in the selected regions of D1, D2, D3, D4, D5 and D6 which represents, Ujemen, Ihummudumu, Emaudo, Opoji, Eguare and Ehuakhuala regions of Ekpoma, Edo State. Also, to minimize the cost of distribution from the factory to their respective distribution channels in Ekpoma is to ensure total supply to point D1 by S1, total supply must be transported by point S2 to point D3 for sale, supply of 105, 1600 and 245 bags must be supplied by S3 only to D1, D2 and D3. Also, S4 and S5 must transport 1600 and 1750bags to point D4 and D6. Lastly, to ensure a balance from the initial supply shortage of 2665, production capacity must be increased to cater for the initial supply shortage. Also, the produced bags must be transport to point D4, D5 and D6 for equitable distribution after production. Also, the model estimate showed that average years of experience of the driver in years (AYE) has inverse relationship with distribution cost (DC). This implies that increase in years of experience of drivers reduces the distribution cost of water across the various distribution outlets. On the other hand, the traffic delays (TD), average orders at distribution outlets (AOD), average length of route/road network plied per time (ALR), number of distribution outlets covered per location (NDO) and quantity of bags transported per distribution trip (QTP) brought about increase in the distribution cost of sachet or table water. The study recommended that production engineers should ensure they provide advisory services to their drivers and the management of their company on distribution schedules using linear cost method to determine the route and quantity that minimizes distribution cost and maximizes profit for their organization.

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