Designing an Optimization Model to Reduce Logistics Outbound Costs in the E-Commerce Industry in Indonesia Using the Mixed Integer Linear Programming (MILP) Method

Syahla Putri, Inaki M. Hakim

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

Indonesia is the third largest internet user in Asia and the online service industry or E-Commerce in Indonesia is growing every year. As the volume of shipping is increasing, large logistical activities are also needed. However, with high logistics costs there is a difference in cost between the target and the actual state of the company due to the optimal delivery planning. Therefore, it is required planning outbound logistics activities that regulate the movement of goods from the warehouse to the customer. This research develops a mathematical model to reduce logistics outbound costs using Mixed Integer Linear Programming (MILP) using LINGO 18.0 software. Outbound logistics costs include shipping and storage costs. Research during these 8 periods has shown that logistical outbound costs have decreased from IDR 80,335.28.55 to IDR 49,487,340.93 with the difference in the total logistical outbound costs by IDR 30,847,877.62. The successful reduction in total outbound logistics costs also resulted in an increase in utility vehicle usage from 58% to 88% and a decrease in the number of vehicle usage from 233 vehicles to 158 vehicles.

Original languageEnglish
Title of host publicationProceedings of the International Conference on Engineering and Information Technology for Sustainable Industry, ICONETSI 2020
PublisherAssociation for Computing Machinery
ISBN (Electronic)9781450387712
DOIs
Publication statusPublished - 28 Sep 2020
Event2020 International Conference on Engineering and Information Technology for Sustainable Industry, ICONETSI 2020 - Virtual, Online, Indonesia
Duration: 28 Sep 202029 Sep 2020

Publication series

NameACM International Conference Proceeding Series

Conference

Conference2020 International Conference on Engineering and Information Technology for Sustainable Industry, ICONETSI 2020
CountryIndonesia
CityVirtual, Online
Period28/09/2029/09/20

Keywords

  • Cost Optimization
  • E-Commerce Industry
  • Mixed Integer Linear Programming (MILP)
  • Optimization
  • Outbound Logistics

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