Development of spreadsheet based decision support system for product distributions

Abstract

Product distribution is a complex process as it involves meeting requirements from several stake holders including the distributors and customers. The primary objective of product distribution process is meeting the customers' demand as well as minimizing the cost incurred by the distributor. For distributor that supports large number of customers, the available commercial softwares for optimizing and scheduling of product distribution are typically being used. However, these systems are complex, costly and require long processing time on a dedicated computer system. Thus, these commercial softwares are not practical for distributors that support small number of customers and as such the optimization and scheduling activities are usually done manually based on rule-of-thumb. This process is time consuming and the results may not be optimal. This paper presents a decision support system employing a two-step sequential approach for product deliveries. First is to determine the optimum carrier required to meet customers demand utilizing linear programming with the objective function to minimize the total distribution cost. Premium Solver Platform (PSP) is utilized to model the optimization problem. Second is to use multi-criteria decision making approach applying various physical and logistic rules to generate the carrier assignment and scheduling. Both approaches are developed using spreadsheet due to its ease of implementation and lowest cost of ownership. The outcome indicates that this decision support system gives a better result compared to the manual assignment of carrier while minimizing the distribution cost. Furthermore, the system requires only a few minutes to generate the results and thus can be applied to practical usage. It is also shown that the system could be used as a viable planning tool for strategic decision concerning investment on the number of carrier required to meet future demand.