Enhancing Cost Efficiency in Transportation Problems: Refining Existing Methods

Abstract

This research aims to enhance the methodology for obtaining a feasible basic solution in transportation cost models, focusing on improving cost efficiency in logistics and supply chain operations. One key application examined is the distribution of raw materials for construction projects (e.g., ready-mix concrete), where multiple production and demand centers exist. Through a review of existing solution methods, we identified several cost-related factors that are often overlooked. Based on these findings, we developed two new approaches for deriving a feasible basic solution. The first method prioritizes the maximum transportation cost index between centers, while the second method integrates both transportation cost and transported quantity (actual cost) as key indicators in constructing the transportation plan. Unlike conventional methods, which consider only a subset of cost-related variables, our approach incorporates a broader range of cost factors. Additionally, the actual cost index method frequently resulted in a near-optimal solution or produced a feasible solution with a lower cost compared to existing techniques. A case study demonstrates the effectiveness of these methods, yielding more economical transportation plans with reduced costs compared to traditional approaches.