Supply Chain Network Design Using Mixed Integer Programming for Start-up: A Case Study of Siklus Refill Indonesia

Supply chain network design decisions significantly affect the total supply chain costs by around 80%. This study focuses on designing a retail supply chain network to minimize total logistics costs by determining the number of facilities, location of facilities, and optimal product allocation per facility. For retailers who use last-mile delivery, the proximity between the starting and delivery destination points is essential. The supply chain network design is based on an actual case study in a retailer company: Siklus Refill Indonesia, which has a multi-echelon network, taking into account changes in the range of coverage and time of service simultaneously. The design of the company's supply chain network needs to be evaluated considering the number of demand points that must be visited, the wide service area, the uneven distribution of hub facilities in all service areas, and the exemption of costs for product delivery. An exact method with the mathematical model of Mixed Integer Programming (MIP) is used to solve this problem. The exact method can produce optimal global solutions. Nine proposed scenarios were developed to solve these problems, concurrently considering the different ranges and service times. Based on the experimental results of the proposed scenario, there is a 46.13% decrease in total logistics costs.