A Mathematical Model for Locating Potential Central Markets and Arranging Transportation Routes for Oil Palm Transportation in the Upper Southern Part of Thailand

Abstract

There is no central market for oil palm in Thailand. Knowing that the central market can help reduce logistic costs and provide a suitable price for oil palm transaction, this research studies a problem of selecting locations of oil palm central markets and constructing vehicle routes for oil palm collection under vehicle speed and capacity limitation with the objective of minimizing the total cost that consists of the vehicle routing cost, the fixed operating cost and the depreciation of the central markets and the vehicles. A mathematic model of the problem is formulated and then validated using comparison and cutting methods. The problem instances are generated from real data of 439 townships of 6 provinces in the upper Southern area of Thailand. Forty-two problems are tested and solved by using a computer software. The computational results show that based on all problem instances, the total cost can be reduced by at least 5.76% when compared to the one of the existing process. In addition with a reduction of the total travel distance, the amount of carbon dioxide emission goes down by at least 13.35%.