Cost optimization in the urban distribution of dairy supply: case of Sanchi Bhopal

Abstract

Urban freight distribution contributes greatly to trading activities and the dynamics of a city. As much as it fulfils consumer needs, it also has certain negative impacts. The negative economic impact involves infrastructure damage, congestion, wastage of resources, and traffic inefficiency. To calculate the cost function, we need to take into account fixed cost, transportation cost, penalty cost. The capacity of the delivery vehicle is higher than the total goods it carries and the time duration at each stop must not precede the pre-defined time window. India is the largest milkproducing nation in the world and contributes 22% of global production with an annual growth rate of 6.27 %. India’s dairy industry is expected to maintain growth at a CAGR of 14% to 16%. Uttar Pradesh (16.3%) ranks top milk-producing state in India followed by Rajasthan (12.6%), Madhya Pradesh (8.5%), Andhra Pradesh (8.5%), Gujarat (7.7%), and Punjab (6.7%). However, the growth is excellent, the unorganized sector cause concern. A report by economic times, 2020 states that more than 50% of India’s milk business is handled by the unorganized sector, due to which there is wastage occurs because of multiple points of handling. Delivery system plays an important part in dairy logistics. 30 percent of total processing cost is said to be the cost of collection and distribution of milk. As per the national dairy development report 2018, the demand for milk would increase to 135.3 percent from the year 2030 to 2050, which is also one of the major reasons that the dairy industry needs to be focused on. The transportation cost during shipment of perishable goods includes only fuel cost. The fuel cost is directly dependent on the distance of transportation. The urban distribution is one of the major factors in supply chain and as the urban freight is increasing this distribution need to work more efficiently and with minimize cost and lose. The report focuses on the study of Bhopal Sanchi dairy by looking into its existing supply chain and using python for modelling the recommendation routes, which also helps in fleet optimization.