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.
Highlights
Transportation is very important and essential to the existence of man
The company's products, namely Brabusco Maize flour (10kg), Grand Pure Soya Oil (10 litres), Vita Chicks Pelletised feeds ( 25kg/9mm) and Royal Layer Concentrate feeds (25 kg) will be used as our origins, since the company has only one production site, and the location of the major distributors namely Yola, Dutse, Minna, Abuja, Aba, Onitsha, Calabar and Ikeja will be used as the destinations
The transportation cost of goods in any company or organization is a pivotal element in determining the total cost of production and the net profit that will be made
Summary
Transportation is very important and essential to the existence of man. We all move from one location to another or move goods and services from one location to another, thereby practicing transportation.Transport costs are a monetary measure of what the transport seeker must pay to obtain transportation services. Transportation is very important and essential to the existence of man. We all move from one location to another or move goods and services from one location to another, thereby practicing transportation. Transport costs are a monetary measure of what the transport seeker must pay to obtain transportation services. They come as fixed (infrastructure) and variable (operating) costs, depending on a variety of conditions related to geography, infrastructure, administrative barriers, energy, and on how passengers and freight are carried. Transport costs have significant impacts on the structure of economic activities as well as on international trade. Empirical evidence underlines that raising transport costs by 10% reduces trade volumes by more than 20% (Jonnson, 2008)
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