Use of Excel Solver for Minimizing the Total Transportation Cost at a Recently Opened Clothing Boutique

Abstract

Optimization is the basis of any business. It can be of maximization type or minimization type. When the optimization will be of maximization type, the focus will be on Profit maximization or Sales maximization and when it will be of minimization type, main focus will be on cost minimization, waste minimization or resource minimization. Be it any kind of optimization, business always focuses on the costing part. Reduction in cost can lead to the maximization of profit. In business, there are different kinds of costs involved, like production cost, transportation cost, packing cost, marketing cost and many more. Transportation cost is not the direct cost, which is involved in manufacturing of product, but it consumes too much of finance. If any business wants to gain competitive advantage over its competitors, transportation cost is the important factor, which needs to be considered. There are different transportation problem solution methods are available like Least cost method, North West corner method, Vogel’s Approximation method, Modified distribution method and Stepping Stone method. Though these methods can provide the initial basic feasible solution and optimal solution also, but all are manual method. In this research paper, researcher has presented how the simple excel spreadsheet can be used for getting the optimal transportation cost. A budding clothing boutique has been operating for two years, selling different clothing garments wants to increase its area of operation. The store does not have any transportation software to focus on the shipping cost. Most of the big companies use different kind of software’s to minimize the transportation cost. But in this research paper, researcher has presented, how the clothing boutique has been benefited with the spreadsheet and how the minimum transportation cost model has been achieved.