Optimization of the distribution of steel pipes using a mathematical model

Abstract

Distribution is one of the most important processes in a supply chain, given that it represents up to two thirds of company logistics costs and up to 20% of the total cost of products. For that reason, it is essential to optimize the costs of distribution. A steel producer located in Monterrey distributes their products to different parts of Mexico. Currently, the distribution is carried out through empirical knowledge, underusing resources and generating unnecessary costs. The aim is to undertake the distribution process more efficiently. This paper presents an optimization model based on vehicle routing problem (VRP), for the distribution of heavy pipes taking into account the company’s own characteristics, such as: rented heterogeneous fleet, multiple shipments of products, split deliveries and open cycles (meaning that the routes may not necessarily end in the depot).