Pickup and Delivery Vehicle Routing Problem with Hybrid Missions and Third-Party Vehicle Rentals: A Case Study of Animal Feed Industry

The vehicle routing problem for small and medium-sized animal feed manufacturers is a complex challenge because each transport route can vary significantly between delivering products to customers and picking up raw materials to return to the factory. Currently, businesses lack well-planned management for utilizing a limited number of trucks. As a result, they often incur additional costs by relying on third-party vehicle rentals. This research aims to reduce transportation costs for small and medium-sized animal feed manufacturers by solving a formulated mixed-integer linear programming (MILP) model, using experimental data that accurately reflects the actual problems faced. The MILP model results help reduce transportation costs by up to 18.5% compared to current practices by optimizing route sequences and incorporating the use of third-party vehicle rentals. This also serves as a guideline for reducing transportation costs in other similar industries.