Production and distribution model in cement industry to minimize supply Chain costs

This study aims to develop a distribution optimization model for bulk and package products of cement industry from cement plant until the store customers in Java and Bali market regions area. In distribution model, 2 cement plants, 5 packing plants, 6 virtual distribution centers, and 128 market areas are included. The transportation mode types are ships and trucks. Linear programming will be used to develop proposed distribution optimization model. The main objective of proposed model is to minimize supply chain costs of production and distribution system in this case study. The improvement recommendation also will be declared to reduce supply chain costs from plant until customers. The implication practices of this study is the supply chain manager could plan and manage the production and distribution of bags and bulks cement product from cement plant until customers that has minimizing supply chain costs. As for the potential reduction in supply chain costs, it can save up to Rp49.6 Billion if existing allocation compared to optimal allocation and also recommendation to stop operation of packing plant due to low production utility.