Just-in-Time Orders Delivery Mixed Outsourcing Problem

Abstract

In a competitive environment, service guarantees would affect customer back-off rate. On time delivery plays an important role on time-based competition. If orders cannot be delivered on time, those orders should be outsourced in order to gain a good reputation. However, if a cargoes distribution company has it own trucks, it would gain more profits if the orders were not outsourced. Thus, JIT orders delivery mixed outsourcing problem (JITMOP) is a difficult decision making problem in a cargoes distribution company. This research constructed a Mixed Integer Programming (MIP) model for maximizing operational profits of the company. The study proposed a Genetic Algorithm with Tabu (GAWT) to solve the model. For validation, the proposed approach was comparing to Random Hybrid Tabu (RHT) and Ransom Search (RS); also found GAWT outperformed RS by an average of 54%. It represented that a cargoes distribution company would gain more than 54% of profits if they schedule orders well, part of orders outsourcing to collaborative companies, and using GAWT heuristics. Future research suggests expanding this research to include more discussion if some assumptions are changed.