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Supply schedule and vehicle routing problem for a home appliance distribution company

Abstract:

Worldwide, distribution companies face logistics problems associated with finding proper routes and delivery frequencies, triggering high logistics costs and low service levels. This is the case of an Ecuadorian home appliance distribution company, whose particular concern is reducing its logistics costs by enhancing its supply schedule with optimal routes, thus satisfying its customers. Using the vehicle routing problem with time windows (VRPTW) optimisation model as a baseline, and including new restrictions aligned to the company's needs, optimal routes are obtained. Then, a new scheduling model is proposed to cover all the company's requirements to create a favourable supply schedule, respecting the shipping capacity of the distribution centre as well as its trucks. As a result, the logistics costs are noticeably reduced because the daily supply is stabilised in terms of money flow with a minimum number of visits while covering the demand. Thus, the company becomes agile, flexible, and competitive.