Application of Transportation Linear Programming Algorithms to Cost Reduction in Nigeria Soft Drinks Industry

Authors: A. O. Salami

Abstract:

The transportation problems are primarily concerned with the optimal way in which products produced at different plants (supply origins) are transported to a number of warehouses or customers (demand destinations). The objective in a transportation problem is to fully satisfy the destination requirements within the operating production capacity constraints at the minimum possible cost. The objective of this study is to determine ways of minimizing transportation cost in order to maximum profit. Data were sourced from the records of the Distribution Department of 7-Up Bottling Company Plc., Ilorin, Kwara State, Nigeria. The data were computed and analyzed using the three methods of solving transportation problem. The result shows that the three methods produced the same total transportation costs amounting to N1, 358, 019, implying that any of the method can be adopted by the company in transporting its final products to the wholesale dealers in order to minimize total production cost. 

Keywords: Allocation problem, Cost Minimization, Distribution system, Resources utilization.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1090637

References:

[1] T.O. Asaolu and M. L. Nassar, Application of Quantitative Technique to Management Accounting. Ile-Ife, Nigeria, Cedar Productions 2002, chapter 3 and 4.
[2] G.B. Dantzig, Application of the Simplex Method to the Transportation Problem, in T.C. Koopmans (ed.), Activity Analysis of Production and Allocation, John Wiley & Sons, New York, 1951 pp. 359–373.
[3] W. J. Fabryoky, P.M. Glare and, P.E. Torgerson, Industrial Operations Research Prentice-Hall, Inc., Englewood SHHSA, New Jersey, 1992 chapter 8.
[4] P.K. Gupta and D.S. Hira, Problems in Operations Research: Principles and Solutions. S. Chend and Co. Ltd., New Delhi, 1998, chapter 3.
[5] P. K. Gupta and D. S. Hira, Operations Research: S. Chand and Co. Ltd., New Delhi, 2005, chapter 4.
[6] F. L. Hitchcock, "The distribution of a product from several sources to numerous localities”, Journal of Mathematics and Physics, 1941 20 pp. 224-230.
[7] T. C. Koopman, "Optimum utilization of transportation system”, Proc. Intern. Statics. Conf. 1947, Washington D.C.
[8] T. Lucey, Quantitative Techniques. 7th edition, London: Ashford Colour Press, 2002.
[9] O. O. Oyesiku, A. J. Abolade, S.O. Kajola and S. G. Napoleon, Basic of Operations Research, 1st edition Ago-Iwoye: Ogun State University Press, 1999.
[10] S. D. Sharma, Operations Research. India: MC Kinsey and Company Inc, 1996.