ENGINEERING JOURNAL CHIANG MAI UNIVERSITY

Volume 26, No. 01, Month APRIL, Year 2019, Pages 234 - 248

The development centralized purchasing method considering rolling horizon: a case study of feed production company

Kamolnut Arunrat, Wipawee Tharmmaphornphilas and Worachok Chaiwong

Abstract Download PDF

The purpose of this paper is to reduce ordering cost of feed packaging of a company having 12 production plants, 3 suppliers and 188 SKUs (Stock Keeping Unit). Currently, each plant staff makes decisions based on his/her own judgment that comes from his/her experience without decision making tools resulting in high purchasing cost. This paper develops a centralized purchasing system using mixed-integer programming to help making decision in a complex system under the conditions which the company and suppliers defined. This system can reduce holding cost, product cost and transportation cost. Testing the system with real data, it found that in the initial stage the model decides to use current inventory resulting in small order quantity. Thus, the total cost in the initial stage is extremely reduced. For the later stages, with this centralized system, the total cost is reduced 810,974 baht per week or about 10.66%.

Keywords

Centralized purchasing, Mixed-Integer Programming, Rolling Horizon

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