Minimizing the Cost of Transporting Goods Produced in an Integrated Foods Company.

Abstract

The transportation cost of goods in any company or organization is a pivotal element in determining the total cost of production and also the net profit that will be made. The main aim of this study is to minimize the cost of transporting goods produced at Grand Cereals Limited, Jos, which is reducing the cost of transportation from the major plant where the goods are produced to the various distribution centers. Data was collected on the average quantity of Brabusco Maize Flour (10 kg), Grand Pure Soya Oil (10 litres), Vita Chicks Pelletized Feeds (25 kg, 9 mm) and Royal Layer Concentrate Feeds (25 kg) produced monthly at the Jos plant, the average quantity demanded by major distributors across the country (Yola, Dutse, Minna, Abuja, Aba, Onitsha, Calabar and Ikeja) and the cost of transporting them. The Vogel's Approximation Method of the TORA Optimization System Software was used in solving the formulated transportation problem, and an optimal solution of N3,427,821.00 was obtained, which reduced the monthly transportation cost by N332,179.00. Furthermore, sensitivity analysis was carried out on the parameters after the optimal solution was obtained, which shows that the optimal solution is strongly sensitive to changes in the problem parameters. It was concluded that this work has reduced the transportation cost of the company and therefore recommended to the management of the company for adoption in planning their transportation schedule at a minimum cost.