The Application of Two Echelon Distribution Network Zoning in an Organic-Chemical Fertilizer Distribution: The Case Study in Northeastern Thailand

Abstract

This research introduced the two-echelon capacitated plant location problem (2E-CPLP) to increase the efficiency of organic-chemical fertilizer distribution in Northeastern Thailand.  The consequences of this unsolved problem either lead to lower productivity or increased use of less environmentally friendly fertilizers.  Though centroid with equal demand zoning was previously used in this area, the unique characteristics of Northeastern Thailand cause this approach to yield less acceptable results.  The introduction of the two-echelon concept is important for practitioners to adopt a better way of operating.  This case-based study compared two facility location problem (FLP) approaches by using the geographical zoning and equal demand zoning methods as a baseline, then introducing the 2E-CPLP method as an alternative.  The problem was solved by IBM ILOG CPLEX software and ArcGIS for Desktop 9.3 with outputs of the total cost, the maximum distance from plants to retailers, and the average distance from plants to retailers.  The results showed that the 2E-CPLP method with geographical zoning outperformed equal demand zoning, with a lower total cost of 246.84 million baht or 1.05%, significantly less computational time, and lower maximum and average distances from plants to retailers.