Study On Control Of Transpotration Cost In Z Company Based On Linear Programming

In market economy featuring ever changeable economic climate, volatilemarket demand, and fiercer competition, cost advantage is crucial to thedevelopment of an enterprise. Transportation costs are getting more and moreattention. However, Chinese logistics is underdevelopment and the transportationcosts are high. In this context, what’s the most importation is how to reducetransportation costs and how to fully utilize transport capacity.Maximum of Profits by reducing cost depends largely on the scientific makingof scientific transport routes—an integral component of management in anenterprise. Over the years, transport routes, worked out by scheduling departmentnot employing advanced expertise but using Previous data, cannot sometimes meetthe real needs, not keeping up with the times. The reduction of cost can only beachieved through scheduling transport in a scientific way, utilizing modem tools,applying a combination of qualitative analysis and quantitative analysis, andquantifying the efforts related to management and optimizing them. LinearProgramming, a method in applied mathematics, can make it come true that undercertain constraint conditions, the optimization of a target is obtained by theappropriate utilization of and allocation of resources. Linear programming is ofimportance in Policy-making, improvement in scheduling, etc. in an enterprise, andis a basic theory and an indispensable method in systems engineering and in modemmanagement.According to a lot of literature and the successful application of operationsresearch in the logistics industry, linear programming is introduced to transportationservices in this paper, it is good for providing new strategies of reducing transportation costs and fully utilizing transport capacity.Firstly, the theory is introduced in the paper. The development process ofoperations research, logistics, and the application of operations research in the fieldof logistics is described. A general mathematical model of linear programming isintroduced. The business of transportation costs in an enterprise is analyzed: thereare many irrational transportation issues, such as empty traveling, convectivetransport, circuitous transport, repeated transportation, transportation back, too fartransportation. Transportation costs primarily include variable costs, fixed costs andmixed costs. Transportation costs are mainly to control fixed costs. The control offixed costs depends on the reasonable control of the transport distance and transportvolume.Based on the above analysis, the paper gives a brief introduction for transportcurrent situation of company Z, and gives a detailed analysis for it. The currenttransport program is “Zoning law”, which is that the operations area of truck isdivided by transport distance. Such as, The11warehouses and22Sales locations ofGroup A are divided into three zones: A, B, C. It has some warehouses and saleslocations in every zone. Sales locations just need to accept goods form warehousesin the same zone, and it can accept other warehouses only when there are no goodsfrom the warehouses in the same zone. This method is simple and feasible, but it justrely on the experience of the planners, with a lot of randomness, blindness,limitations and unscientific. Transportation planed by different people will vary a lot,employees have weak cost consciousness, and could not find the best route, whichwill often cause a huge waste.And then, according to three cases of supply and demand balance, supply anddemand imbalance, containing a transit station which is exited in company Z, thepaper introduced the theory of linear programming and build optimization modelbased on the general model of linear programming. Planners can prepare the transportation plan with the lowest cost according to this model.In addition, this paper discusses the safeguards that how to achieve the newtransport program. It can be achieved through improving the professional qualityand cost-conscious of employees, and strengthening scientific management, etc.Finally, the paper carried out case analysis to the optimization model. Forexample, there is the transport operations of company Z in February2014, six Saleslocations in Group A putted forward the demand plan, and company Z need totransport goods from11warehouses to these six o sales locations. Storage capacityof each warehouses and the demands of each sales location are not identical, thedistance and quantity from each sales location to each warehouse are not identical,too. Put the relevant data into the optimization model to plan a route. Tit is veryimportant that How to allocate vehicles reasonably,because it is good for reducingthe transportation cost according to the transport capacity of company Z. Comparingwith the company’s present transport solutions (Zoning law), the linear programmingmethod is effective. Therefore, the linear programming method can achieve the goalof reducing logistics cost, and help enterprises to enhance their marketCompetitiveness.