A Location Analysis for Oil Palm Distribution Center in Krabi

Abstract

This research was conducted to determine the location of oil palm distribution center (DC) in order to minimize a total cost of oil palm transportation in Krabi. The transhipment model and Risk Solver Platform Program were used to find the optimal location for the distribution center. The starting point of transhipment are farmers grouping by district, with a total of 48 districts and the ending point are 21 oil palm plants of located in Krabi, where every district has the opportunity to set up distribution center of oil palm equally.

            This research studied two models of transportation. The first model is defined by forcing all farmers to transport their products only to distribution centers. The second model captured the situation where farmers had a choice to ship their products either to distribution center or plants.

            The results showed that in the first model. Distribution center must be established in a total of 36 DCs with a total cost of 455,841,558.82 baht. This results in a reduction of transportation costs by 19.30 percent from the current transportation costs, 108,141,818.62 baht.

            The results of the second model shown that distribution center must be established in a total of 24 DCs with a total cost of 449,068,915.26 baht. This results in a reduction of transportation costs by 20.29 percent from the current transportation costs, 113,672,462.18 baht.