Abstract
Transportation network is time bound supply mechanism and it involves multiple levels. It is beneficial for an organization to identify optimal transportation routes by exploring different options. This practice can help in minimizing the transportation costs and Optimizing the delivery time. In this study, multiple levels of transportation transshipment network are considered and by adopting Mixed Integer Linear Programming (MILP), cost of transportation network is minimized. A comparison with the existing cost indices is provided for effectiveness of the tool used. Result indicates an improvement in the cost saving and comparison with the initial results suggests cost saving by 9.41% in transporting raw materials from depot to the factory level while 8.7% cost saving is achieved in transshipment of finished goods from warehouses to distribution centers. Overall, the total cost is reduced by 18.17% which is a significant improvement and can be translated into profit margin of the production supply chain. We also generalize the findings of the study by assessing the statistical robustness of the results.
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