Rating

Vehicle Routing at Baroda

Union
Case analysis-02
Group # 34

Section SCMT 03
SCMT-2016

Q.1) Identify the key challenges faced by the Baroda Union. How
important is in-bound logistics for Baroda Union?
A. The major Challenge for the Baroda Union was to minimize the total cost
so that their members get highest payment per litre of milk. The
transportation costs involved in milk procurement accounted for 17% of the
total cost involved, thus reducing transportation cost was a main step
towards minimizing the total cost. The process of procuring milk faced
various issues like:

Being a perishable commodity, the transport of milk needs to be fast.

The time lag between milking and processing should not exceed more
than 7 hrs. Thus milk needs to be either processed or kept in a chilling
condition at specified hours to avoid curdling. The curdled milk could
not be used in any productive ways and minimizing the percentage of
milk getting curdled was very important. Moreover, during the summer
season about 5 per cent of the milk was received in curdled form.
The Union has 700 geographically spread out village-level cooperatives covered by 44 truck/tempo routes which created difficulty in
getting milk in time from far-flung societies.
The milk procurement was seasonal in nature and thus the Union
designed the routes according to the peak procurement. Thus the
routes are not effectively utilized during the non-peak seasons as
procurement drops down to about 50% during that time.
The presence of same routes every year which are old without the
possibility of designing scientific routes.

The in-bound logistics are very important for Baroda Union as they form the
major crux of the business. The major responsibilities of the in-bound
logistics are:

Transporting milk from 580 societies to the processing center.

Transporting milk from 180 societies to the chilling center and then
from there to the processing Centre.
Delivering the can back to the society to avoid any delay in next
delivery.

The milk was procured twice a day and the delivery has to be at specified
hours in order to prevent curdling of milk and the penalty faced by the
contractors. Thus a sound and highly efficient inbound logistics was the basic
and far most important need of the Baroda Union model.

Q.2) Suggest a suitable approach that Baroda Union can use for
designing efficient routes for milk collection. What kind of conflicts
are these revised routes likely to create at Baroda dairy? How
should Baroda Union handle these issues?
A.
Route 51:`
An enhanced analysis taking savings matrix into consideration reveals an
optimum route design which is depicted as follows:
0
(Chillin
g
Centre)
5

The time taken is as follows:

PATH
06
61
12
23
34
45
50
TOTAL TIME

TIME TAKEN (HOURS)

1.03
0.77
0.23
0.23
0.6
0.43
1.43
4.72

Thus, the total time taken by the modified route path lies within the time lag
constraint of seven hours.
From the attached excel sheet, the total capacity of route 51 = 80 cans.
Since, the capacity of each tempo is 100 cans, it also satisfies the capacity
constraint.
Route 52:
The optimum route design by incorporating the analysis of savings matrix
into account is as follows:
0
(Chillin
g
Centre)
10

11

The time taken is as follows:

PATH
0-7
7-8
8 11
11 - 9
9 10
10 0
TOTAL TIME

TIME TAKEN (HOURS)

1.33
0.47
0.37
0.4
0.23
0.7
3.5

Thus, the total time taken by the modified route 52 is 3.5 hours. This is well
within the time lag constraint of seven hours.
From the attached excel sheet, the total capacity of route 52 = 55 cans.
Hence, the modified route 52 also satisfies the capacity constraint.

Route 54:
The total capacity of Route 54 from the attached excel sheet = 102 cans. But
this exceeds the mandated capacity of 100 cans per tempo. Hence
integrating the analysis of savings matrix, along with the capacity
constraints, results in the design of two optimal routes which is as follows:
0
(Chillin
g
Centre)
16

14

15

12

13

0
(Chillin
g
Centre)

17

Route 54 (i)Route 54 (ii)

The time taken for Route 54 (i) is as follows:

PATH
0 14
14 12
12 13
13 15
15 16
16 0
TOTAL TIME

TIME TAKEN (HOURS)

0.9
0.4
0.27
0.2
0.33
0.73
2.83

Total time taken by Route 54 (i) is 2.83 hours which is limited within the time
lag constraint of seven hours.
The capacity of Route 54 (i) (from the attached excel sheet) = 96 cans.
Now, the time taken for Route 54 (ii) is as follows:
PATH
0 17
17 - 0
TOTAL TIME

TIME TAKEN (HOURS)

0.5
0.5
1

Total time taken by Route 54 (ii) is 1 hour which is well within the time lag
constraint of seven hours.
The capacity of Route 54 (ii) (from the attached excel sheet) = 6 cans.

Route 55:
The optimum route design by incorporating the analysis of savings matrix
into account is as follows:

0
(Chillin
g
Centre)
22

20

21

18

19

The time taken for Route 55 is as follows:

PATH
0 20
20 18
18 19
19 21
21 22
22 0
TOTAL TIME

TIME TAKEN (HOURS)

1.5
0.53
0.4
0.67
0.43
0.73
4.26

The total time of 4.26 hours which satisfies the time lag constraint of lying
within seven hours.
The total capacity of Route 55 from attached excel sheet = 61 cans. This also
satisfies the capacity constraint.

Route 60:
Analysis of savings matrix results in the following optimized route design:

0
(Chillin
g
Centre)
27

25

26

23

24

The time taken for Route 60 is as follows:

PATH
0 25
25 23
23 24
24 26
26 27
27 0
TOTAL TIME

TIME TAKEN (HOURS)

0.7
0.1
0.1
0.33
0.17
0.37
1.77

Thus, the total time taken by the modified Route 60 is 1.77 hours. This is well
within the time lag constraint of seven hours.
From the attached excel sheet, the total capacity of route 60 = 71 cans.
Hence, the modified route 60 also satisfies the capacity constraint.

Route 62:
The optimum route design by incorporating the analysis of savings matrix
into account is as follows:

0
(Chillin
g
Centre)
31

33

30

28

32

29

The time taken for Route 62 is as follows:

PATH
0 33
33 28
28 29
29 32
32 30
30 31
31 0
TOTAL TIME

TIME TAKEN (HOURS)

0.43
0.4
0.33
0.2
0.17
0.13
0.6
2.26

The total time of 2.26 hours which satisfies the time lag constraint of lying
within seven hours.
The total capacity of Route 62 from attached excel sheet = 38 cans. This also
satisfies the capacity constraint.

Q.3 In what way will the problem of designing optimal vehicle

schedules be affected by the nature of ownership (corporate sector
vis-a-vis co-operative dairy like Baroda Union)?

A. Corporate sectors follow a diverse transportation strategies where as in

case of co-operative structure similar to Baroda Union have limited options.
In corporate sector milk cans are assembled across cluster of villages i.o.t to
reduce the cost along with effective management of transportation asset. In
co-operative dairy, milk is procured from village to village resulting in larger
number of pick-up locations. Thus transport cost increases due to
procurement from remote and multiple locations.
As the demand for milk is seasonal, the co-operative diaries take the entire
milk production from the farmers where as corporate diaries procure as per
their demand. Therefore, in co-operative setup, there may be times where
there is under supply or over supply of milk by farmers.
The private sector diaries are very profit oriented, as a result they pay
emphasis more on avoiding spoilage of milk by curdling. The co-operative
dairy they look to reduce transportation time from the village to the
destination.
The farmers take the major hit as the corporate setup middleman exploit
their need by paying them ridiculously low. The co-operative union provides
the farmer with the sense of ownership, so that they get lucrative price for
their surplus milk.
A redesign in the route involves an alteration in the lifestyle of farmers. The
schedule of the vehicle must be in sync with the milking time and the rest of
the activities scheduled around milking time.
In corporate, middle men will bear the cost incurred for loss due to curdling
of milk. However, this is not the case with cooperative societies. The logistics
will have the additional cost incurred.

Q.4) If you were Jagadish Patel, what would you do?

A. Cost Analysis:
Route 51:
Total Distance = 31 + 23 + 7 + 7 + 18 + 13 + 43 = 142 kms
Cost of using Ghanshyamdas as contractor = 3 * 142 = Rs.426
Cost of using Ibrahimkhan as contractor = 3.28 * 142 = Rs.465.76
Therefore, Ghanshyamdas must be applied as the contractor for Route 51
owing to the low expense incurred for the same distance.
Route 52:

Total Distance = 40 + 14 + 11 + 12 + 7 + 21 = 105 kms

Cost of using Dhanishran as contractor = 3.38 * 105 = Rs.354.9
Cost of using Rajput as contractor = 3.50 * 105 = Rs.367.5
Therefore, due to the low expense incurred, Dhanishran must be applied as
the contractor for Route 52.
Route 54 (i):
Total Distance = 12 + 8 + 6 + 10 + 22 + 27 = 85 kms
Cost of using Salimbhai as contractor = 3.78 * 105 = Rs.396.9
Cost of using Galubhai as contractor = 4.26 * 105 = Rs.447.3
Therefore, Salimbhai must be employed as the contractor for Route 54 (i)
due to the low cost.
Route 54 (ii):
Total Distance = 15 + 15 = 30 kms
Cost of using Salimbhai as contractor = 3.78 * 30 = Rs.113.4
Cost of using Galubhai as contractor = 4.26 * 30 = Rs.127.8
Therefore, Salimbhai must be employed as the contractor for Route 54 (ii)
due to the low cost.
Route 55:
Total Distance = 45 + 16 + 12 + 20 + 13 + 22 = 128 kms
Cost of using Ghanshyamdas as contractor = 2.68 * 128 = Rs.343.04
Cost of using Shantilal as contractor = 2.72 * 128 = Rs.348.16
Cost of using Jugalkishore as contractor = 3.36 * 128 = Rs.430.08
Cost of using Girdhari as contractor = 3.52 * 128 = Rs.450.56
Therefore, Ghanshyamdas must be employed as the contractor for Route 55
due to the low cost.
Route 60:
Total Distance = 3 + 3 + 21 + 11 + 5 + 4 = 47 kms
Cost of using Jashwant as contractor = 4.60 * 47 = Rs.216.2
Cost of using Dhanisharan as contractor = 4.66 * 47 = Rs.219.02

Therefore, due to the low expense incurred, Jashwant must be applied as the
contractor for Route 60.
Route 62:
Total Distance = 13 + 12 + 10 + 6 + 5 + 4 + 18 = 68 kms
Cost of using Gabubhai as contractor = 3.34 * 68 = Rs.227.12
Since Gabubhai is the only contractor for Route 62, he must be appointed as
the contractor for the route.
Thus, Jagdish can design the routes as described in Q.2 and appoint the
contractors as mentioned above to reduce costs incurred.