Optimizing transportation cost with joint ordering:

A cyclic ordering strategy is selected to minimize transport costs for a Mexican distribution company specialized in industrial lubricants. Simulations we made first following the modified algorithm of Goyal. Several scenarios changing major and minor setup cost were compared with a method from Chopra & Goyal that agglomerates around the most ordered product. Goyal algorithm proved to generate lower average costs every time. Following this procedure other restrictions related to the company operations were introduced. First a method from Porras & Dekker is applied to include minimum order quantities. Then to include truck capacity restrictions Goyal algorithm is applied and the ordering is changed to improve the average percentage of filling from the trucks. Finally a non-cyclic strategy is used to compare the results and show the limitations from cyclic strategies.