Maritime inventory routing problem with undedicated compartments: A case study from the cement industry

The cost of sea transportation in the cement industry located in an archipelago country has a large contribution of the overall cost because cement is a heavy product but the price is cheap and must be distributed to packing plants that are spread across several islands. The high level of competition among cement companies makes the issue of cost efficiency and inventory availability a major concern for companies. This paper proposed a solution to maritime inventory routing problems (MIRP) to minimize the cost of sea transportation faced by a cement company in the Indonesian archipelago in meeting the needs at the consumption port. Unlike other multi-product handling such as oil and other chemicals that require the use of special compartments on ships, undedicated ship compartments are generally used on multi-product cement carriers. To solve this problem, we developed a mixed-integer linear programming (MILP) model to minimize transportation costs with an inventory level that remains unfulfilled during the planning horizon period. The results of this optimization provide a global optimum with the total cost of transportation about IDR 3.69 billion for the second week period in October 2019 and maintained the availability of cement during this period.