Optimizing Distribution Costs Using Linear Programming in Refinery Sugar Manufacturer

This research was conducted at a private producer in Indonesia involved in the manufacturing of refined sugar commodity products. The company presently operates three factories situated in three cities across three distinct provinces. The objective of this study is to minimize the transportation costs incurred from shipping tonnage sugar from manufacturers to customers' warehouses. This study concludes that contemporary commodities companies might utilize linear programming to enhance their operations, particularly in logistics and distribution processes. Further, a new distribution pattern involving multiple warehouses and distribution centres, or customer warehouses, was proposed to the management team, resulting in more efficient distribution costs compared to previous expenditures. The analysis concludes that the minimum transportation cost for sugar dispatching is IDR 7,755,670,000. The warehouse at Cilegon has been designated to distribute the product to Jambi, South Sulawesi, DKI Jakarta, and Bogor. The warehouse in Surabaya was designated to transport sugar to Bandung, Pekalongan, Semarang, and Sidoarjo. A warehouse in Makassar was assigned to deliver sugar to Bogor, Bandung, Palangkaraya and Banjarmasin in Indonesia. The research suggests that management can employ a linear programming approach to minimize transportation costs by optimizing the sugar distribution pattern from each warehouse to the customer. This study suggests that management can use a linear programming approach and combine this method with a transportation model to minimize transportation costs. Management team, particularly the logistics department, can utilize two phases of solution analysis which is the initial and optimal solution. Keywords: Distribution centers, food processing, linear programming, shipment, transportation cost.