Optimization of inbound logistics cost in automotive industry

Abstract

The increasing growth of automotive industry in Indonesia has not been matched by the number of local suppliers and makes the automotive industry too dependent on imported raw materials. Along with the needs of import activities, it is also required a greater logistics activities. However, with high logistics costs, the manufacturer must increase efficiency to be able to compete in the global market. This can be accomplished by planning inbound logistics activities that control the movement of materials from suppliers to the manufacture. In this research, an optimization methodology, based on Mixed Integer Nonlinear Programming (MINLP) approach is developed and solved with branch and bound algorithm. The result of this research, which obtained the total cost of optimal inbound logistics include material cost, transportation cost, and administration cost. This model can also be used as a tool for the company in making decisions about the type and the number of container also with the total of the optimal material load in each container, therefore the optimal container space utilization value can be obtained.