The company currently delivers fertilizer using trucks with a capacity of 16 tons directly from factory to distributor. In practice, trucks deliver fertilizer more than their capacity that causes frequent traffic accidents. It prompted the Indonesian government to make regulations that prohibit trucks from carrying loads that exceed their capacity. If the regulation is fully implemented, it will significantly increase the cost of distribution. Therefore, the company intensively tries to find ways to reduce delivery costs. Currently, the company considering intermodal delivery as an alternative in delivering fertilizer to distributor. In this alternative, bulk fertilizer is sent by ship, then bulk fertilizer is brought by the truck to the packing plant and after bagging, the fertilizer is sent by truck to the distributor. The company needs to determine optimal combination of direct delivery using trucks and intermodal delivery in bulk using ships and trucks. Intermodal delivery, in this case, is a complex problem. It is because there are uncertainty and interdependency between stages in the delivery. Therefore, simulation is used to estimate capacity of packing plant. The simulation model is submodel of Integer Linear Programming (ILP) model. The output of simulation model will be used as right-hand-side (RHS) of capacity constraint in the ILP Model. In addition, sensitivity analysis has been done to explore characteristics of solution in some different ship capacity and some overload thresholds capacity in regulation. The optimal solution of the ILP model shows two important insights that are many district warehouses are still more efficient to be supplied directly by truck from factory and the farther the distributor's location, the more chance it will be supplied via intermodal delivery.

@inproceedings{oscm-2019-496,
  title={Hybrid Simulation and Integer Linear Programming Model for Intermodal Distribution: A Case Study of Fertilizer Company in Indonesia},
  year={2019},
  author={Dody Hartanto and Rahmat H. Saleh},
  booktitle={Proceedings of the 9th International Conference on Operations and Supply Chain Management, Vietnam, 2019},
  doi={10.31387/oscm410208}
}

Dody Hartanto, Rahmat H. Saleh (2019). Hybrid Simulation and Integer Linear Programming Model for Intermodal Distribution: A Case Study of Fertilizer Company in Indonesia. In Proceedings of the 9th International Conference on Operations and Supply Chain Management, Vietnam, 2019. https://doi.org/10.31387/oscm410208