Product Distribution Optimization in Food SMEs with Integer Linear Programming

Abstract

Efficient product distribution is a key driver of the overall profitability of a company. The high cost of product distribution in food SMEs is caused by the absence of a proper distribution cost calculation to obtain optimal distribution decisions. This research aims to provide SMEs with a product distribution model with the lowest cost. A Heterogenous Fleet Vehicle Routing Problem (HVRP) for SMEs product distribution is modeled in the form of Integer Linear Programming and solved using branch-and-bound algorithm to obtain an optimal route and vehicle assignment with the lowest cost. The result of this research is a model that can be used by SMEs to make daily product distribution decision.