Facility Location Placement Optimisation for Bagged Cement Distribution During the COVID-19 Pandemic

Abstract

This study was based on a challenge that one of Thailand's cement companies encountered in 2021 as a result of fierce competition in the Northeastern region and falling market share during the COVID-19 pandemic. Without a doubt, the management of supply chains played an essential role in this issue. As a result, this research addressed the company's distribution strategy by attempting to determine a new location for the distribution centre to achieve two conflicting objectives at the same time, namely, minimising total transportation cost and maximising service level (delivery lead time reduction). For the problem at hand, a linear programming model was developed. Once different options were identified, the pros and cons of each approach were evaluated, and then the distribution strategy was altered to meet the actual conditions. It was discovered that changing distribution centres in some locations was a successful strategy for shortening delivery lead times with an opportunity to achieve a 22% improvement in service level while still controlling transportation expenses prior to arriving at the end customers not beyond the target at 15% increased from the current strategy.