Minimization of Distribution Cost for a Paint Distributing Company

Abstract

This study employed Excel Solver to find the monthly total minimum and maximum costs of distributing buckets of gloss paint by Ehi-sly Enterprise Limited to its nine major customers. The monthly total minimum cost was then compared with the monthly total maximum cost and the potential saving was determined. The company has two warehouses and nine major customers dispersed within three localities, Uromi, Ubiaja and Irrua in Edo State. The monthly inventory levels of the two warehouses and the price of distributing a bucket of gloss paint from each of the warehouses to its various customers coupled with the customers’ monthly orders were used in the cost minimization and maximization. From the results obtained, it is shown that the monthly total minimum cost of distributing the ordered buckets of gloss paint to the nine customers is ₦4,384,000 as against the monthly total maximum cost of ₦8,042,500. This indicated a potential monthly saving of ₦3,648,500 which can boost the company’s profit margin.