Feasibility Analysis of Financial Aspect in Determining Optimal Last Mile Warehouse Location Using P-Median Method

Abstract

This research was conducted at a company engaged in the Iot Aquaculture sector with a product in the form of a shrimp smart feeder which was distributed to almost all islands in Indonesia. Based on an assessment made by the company in the product distribution aspect on the island of Sumatra, especially Bengkulu Province, it is considered still not optimal because there are still a number of cases where the last mile point is not able to meet the demand so that a decision is made to send it directly through the central distribution warehouse in the city of Bandung. This has an impact on the total distance and shipping costs to be large. Therefore, it is necessary to design long-term strategic steps in overcoming this, one of which is determining the location of the warehouse as a lastmile point to meet demand in the Bengkulu area with an optimal location by considering aspects of optimal location and financial feasibility. The method used in this study is a feasibility analysis using the calculation of the Net Present Value, Payback Period, and IRR, as well as determining the optimal location using the P-Median method with the Mixed Integer Linear Programming approach that used in parallel. The results showed that the location with the lowest demand-weighted distance and was declared feasible based on the feasibility analysis which was located in Kaur Regency. If this decision is made, the company can reduce the total cost of shipping the Bengkulu area that must be incurred by the company.