Study and Analysis of Milk-Run Model for Minimum Cost Under Upstream Supply Chain of a Dairy Plant

Abstract

The milk-run model is a distinct transportation model from the perspective of logistics and supply chain. Firms invest heavily on transportation of goods. In this paper, a real case of a dairy plant is taken into consideration. In the upstream of supply chain, raw milks are collected from milk farmers and deposited to dairy plant for further processing. The milk-run model of upstream supply chain is studied, and mathematical model of vehicle routing problems is adopted to minimize the transportation cost. Genetic algorithm (GA) and mixed integer programming (MIP) are used to solve the vehicle routing problems (VRP), and thus, transportation cost is minimized. The study resulted in reduction of transportation cost by 35.14% when MIP-based approach was used and 30.29% when GA-based approach was implemented.