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Minimization of Transportation Cost in Courier Service Industry

Muthu karthikeyan , Dr. M. Elango

This paper is focused on methodology to reduce the transportation cost for a courier industry. Transportation cost is one of the major concerns in courier industry. Most of their operations depend on the vehicles, hence maintaining transportation cost as much as minimum will increase the profit margin. Each company has got customers with each demanding for both delivery /pickup with their vehicles having variable capacities. The problem concerning in this paper is to find a set of tours of the vehicles with minimum total travelling lengths, so that minimum transportation cost can be obtained. In each tour, a vehicle begins at the depot with certain amount of parcels/documents for delivery, then visits a subset of the customers in order to deliver on board parcels /documents. After completing all its delivery demand the vehicle will return back and start picking up the parcels/documents from the same customer point and returns to the depot. Irrespective of the time during the tour, a vehicle must always satisfy the capacity constraint of the vehicle. K-Means clustering is used as a standard clustering technique and that has been further refined by nearest neighbourhood heuristic. For both these clustering, routing has been done using LINGO solver. Transportation cost has been calculated for the corresponding routing distance given by the solver.