submitted in partial fulfillment of the requirements for the degree of bachelor of engineering in logistics and supply chain management

VIETNAM NATIONAL UNIVERSITY — HO CHI MINH CITY INTERNATIONAL UNIVERSITY

SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT

Thesis Advisor: Dr TRAN DUC VI

Ho Chi Minh City, Vietnam

June 2023

VIETNAM NATIONAL UNIVERSITY — HO CHI MINH CITY INTERNATIONAL UNIVERSITY

SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT

Thesis Advisor: Dr TRAN DUC VI

Ho Chi Minh City, Vietnam

June 2023

March 2023

Thesis By

Tran Dinh Khang

Submitted in partial fulfillment of the requirements for the Degree of Bachelor of Engineering in Logistics and Supply Chain Management

International University, Ho Chi Minh City March 2023

Tran Dinh Khang

Certified by

Dr Tran Duc Vy Thesis Advisor

Dr Nguyen Van Hop Dean of IEM school

2.1 Overview of SCL- Saigon Cooperation Logistics Company sss000 2.2 Literature review

2.3 Considered Solution Direction

2.3.1 Brief Description of Possible Approaches .o sec se sssssse 2.3.2 Tools for the Improvement

4.3 Solution development

4.3.1 Create a project in Pycharm

4.3.2 Working with Excel

4.3.3 Illustrate the result

10 10 11 12 13 13 14 20 20 21 23 23 30 32 32 32 32 33 35 35 36 37 38

LIST OF TABLE TABLE 2.1 LITERATURE REVIEW TABLE 3.1 PROPOSED APPROACHES TABLE 3.2 METHOD COMPARATION

LIST OF FIGURE

FIGURE 1.2 GANTT CHART ích nh HH Hà Hà Hà Hà Ho Ho HH HH HH Hi 12 I1610)14902008.72\6/0)09/00 b3aiaiiiäẳắăầắầẳủẳẮÚẮẮ 13 FIGURE 2.2 CHEERS & SMILE TH HH HH Hà HH HH du 14 EIGURE 2.3 CPLEX SOFTWARE nh HH HH HH HH Hà 21 FIGURE 2.4 GOOGLE MAPS APP nh HH HH HH HH HH 22 (60) 490/2 5059(03lMƠHiiiiiiiiiiii.i.i4ốồ 22 EIGURE 3.1 SGL PROPOSED DESIGN SYSTEM nhu 30 FIGURE 4.1 CREATE NEW PROJECT PYTHON FILE wee 35 FIGURE 4.2 CODE wii .d 36 EIGURE 4.3 EXCEL "TEST” DATA EFILE ác nh nh HH Hà HH Ha 37 FIGURE 4.4 RESULTT nh HH Hà Hà Hà Hà Hà Hà HH HH HH Hi Hà 37

1 INTRODUCTION 1.1 Motivation

In the edge of the rapidly raising consumnism, logistics is an aspect of supply

chain which plans, implements, and controls the items flow, effective forward and reverses flow and storage of goods, services, and related information focus

on the flow of goods from the original point to the end- user point in order to meet customers’ requirements Logistics exists from the day knowledge of

human obtained to raise cattle, cultivate, delivery goods From the Greek

logistikos, in military science, Logistics means “skilled in calculating” of all the operations of armed-force units in missions for supporting combat forces, including transport, supply, signal communication, medical aid Beside that it is a key factor of every industry, operations, company in term of run the business smoothly, enhence the productivity, optimize the operating cost, find the optimal suppliers, improve the quality of service, maximum profit and minimum loss According to council of Logistics and supply chain management, there are multiple specific fields associated with many occuring problems that attracting all of the logistics researchers on the world to solve and give the practical the solutions which are strongly conducted in real life Among them, Delivery system is a hot topic ofnot only in VietNam Logistics but also in the entire world right now due to the rocketly increasing in population leads to the fast growing of new mode of transportation systomer and the density of tranporting nework

in big cities such as Ha Noi, Ho Chi Minh, Can Tho,

Therefore, it is currently creating many problems in many company, they will face to difficult challenges such as how to ultilize the capacity of delivery transportations, how they can design the optimal route to delivery all the orders from customers but in minimum cost and in time due to the time window, etc All of them are the main problems in Logistics delivery systems that reseachers

have to deal with.

1.2 Delivery system

Distribution centres are depots, warehouses where processed items are stored before being picked and packed to fulfill client orders In some regards, they are similar to dedicated, strategically positioned warehouses Distribution centres play an important role in the supply chain, particularly in terms of expediting and accurately filling client orders while keeping associated expenses minimal Tasks conducted at a DC are for example unloading, inbound quality controls, inventory and order management, pick-and-pack, outbound delivery

coordination, loading on transport vehicles, return management, etc

Distribution centres effectively combine typical warehouse techniques with the capabilities of a fulfilment centre to provide storage solutions that allow businesses to transport items to clients rapidly The DC can be outsourced to Third Party Logistics (3PL) providers instead of buying their own vehicle to deliver the goods.

\ nput | Mathematic Mathematica

_ > Order >| Receive order | Preparation

Demand model

Output Loading & Receive

* Receive goods + Checki + Shippin goods 8 transporting ecking = + products HN

7 +

Picking « Classification

Figure 1.1 Delivery System

The problem of Saigon Coop Logistics is to deal with the back orders of fresh products that the market units under Saigon Coop company do not agree to receive due to the bad quality of the products or failures during the delivery process For each market, Saigon Coop distribution center is the exclusively main supplier They make orders for specific products with the time window, the

distribution center will assign and record the order, it’s called assigned order

Then the orders will be delivered to the Coop market units followed the exact due time, it’s called delivered order If the market units cancel the order or reschedule the order to another day when the goods are already to be delivered, this cause the failure in delivery, it calls the failing delivery rate The more failing delivery rate obtains, the more cost and time the company needs to face to Especially, due to the charistics of fresh products they can not be reserved in the neutral conditions, to get the best quality they must be secured in proper temperatures To load them on the trucks, they are required to deliver to the next reservation area as soon as possible- Coop market units As a result, the failure in delivering them will affect directly to quality of the product, potentially harm company’s reputation and badly degrade customer experience on products Additionally, delivering the rescheduled order will cause the company more

money and time to rent the trucks It will be the big problem to Saigon Coop Logistics when it comes to big events like Holidays, Sale events, Weekend that the distribution center will be overloaded because they need to manage the new supplies and back orders at the same time in high density

As a result, it needs some improvements in inventory system to find the maximum of the expected successful delivery orders in a day and methods to search the optimal routes for trucks in order to delivery 1n time and save cost for the travel distance of delivery vehicles

1.4 Objective

To design delivery routes for Saigon Coop Logistics company to Coop supermarkets system in Ho Chi Minh city, the objectives are determined in this thesis are:

+ Minimizing the total travel distance between the distribution center to each market node

+ Finding the optimal routes within the shortest kilomater paths for each truck to delivery goods

+ To deliver the goods on time due to customer’s order schedule

+ To enhence quality of service and customer’s experience under Saigon Coop supermarket’s system

+ Maximum the expected delivery successful rate 1.5 Scope and limitations

1.5.1 Scope

In general, Sagon coop company 10 main distribution centers located in the Di

An, Binh Duong, Ho Chi Minh city, but this thesis only concentrates on Ho Chi

Minh markets and selected one among 10 distributions as a concrete case to analyze and give the final solution for the above mentioned problem The selected distribution center is from Di An, Binh Duong within 1000 m2 and it is managed under SaiGon Coop Logistics company From the established day until now, SG Coop Logistics has decided not buying their own vehicles to deliver

goods.Indeed, the delivery vehicles are provided by an exclusive Third Party Logistics Company and the main transportation is truck within the capicity 1s 2 tons The number of rent trucks is the same as the number of drivers equally 20 The schedule for the delivery activities is from 7:00 am to 21:30 pm for everyday including Sunday There are 168 units to deliver the goods in total such as Coopmart, Coop Smile, Coop Food, etc However, to run the model precisely, this thesis does not have the ability to run for all 168 units within 30days a month As a result, 100 units will be randomly selected to be the data for the solving model in order to run the existing time window based on the orders of 100 Coop units in | day

1.5.2 Limitations

The main limitations of this operation are:

+ Need more time to test and evaluate the new model design + Require high calculating skill in processing data of goods + Seasonally in demand will affect our warehouse because the demand fluctuates It required our warehouse to be flexible to maintain the operation even in different situations

+ Traffic situation, cost of planning and package process 1s not mentioned + To adjust the large-scale project, this model needs to add more variables and complex constraints

1.6 Project plan

Main Task

Literature review Design Concepts Consideration

Define model d

System Design khi

Result and Sensitive

2 DESIGN CONCEPTS CONSIDERA TION

2.1 Overview of SCL- Saigon Cooperation Logistics Company Sai Gon Co.op was established in 1989, is a cooperative economic organization on the principle of establishing collective ownership, autonomous production and business activities and self-responsibility From 1992 - 1997, along with the development of the country's economy, foreign investment capital into Vietnam made enterprises to be dynamic and creative to seize business opportunities, learn management experience from foreign partners Saigon Co.op has started joint ventures with foreign companies to increase resources for its development direction In 1998, Saigon Co.op restructured its organization and personnel, focusing all its resources on investing heavily in retail Coopmart supermarkets in turn marked an important development stage: the formation of a supermarket chain branded Co opmart

SAIGON CO.OP

Figure 2.1 SaGon CO.OP

Nowadays, Sai Gon Coop launched the modern department store chain model Co.op Smile, Co.op Extra, Co.op Food, Cheers with the mission of modernizing the department store model that is familiar to Vietnamese people, to bring good quality and good prices to over Millions customers on around Viet Nam area SCL 1s established in 20/10/2016 under the Ho Chi Minh City Trade Cooperative Union HCM in charge of transportation, logistics, goods at the warehouse in Binh Duong Currently SCL is providing below services:

+ System of warehouses serving satellites goods for small chains Concept Saigon

Co.op

+ Home delivery in the profestional improvement to enhance the more quality service for customers

+ Development based on communication platform goods and IT Satisfy the need of forwarder for business models SGCOOP business: E-com, SC Media, Cloud

Kitchen/Kitchen Center, Call Center, Facebook, Zalo

+ Providing storage services, warehouse operation, Shipping for the Supplier SGC guaranteed the best service and optimal cost

+ Mainly supplier for Co.op Smile, Cheers store

1 G.Laporte The vehicle Exact Exact algorithms can routing algorithms: only solve relatively problem: An lower bound small problems, but a overview of and a related number of exact and branch&bound | approximate approximate algorithm algorithms have

satisfactory

Hosseinabadi | A New Gravitational To minimize the total Efficient Emulation cost (for example, a

Approach for Local weighted function of Solving the Search the vehicles and the Capacitated Algorithm distance to be

Emulation Local Search Algorithm

El-Sherbeny A Particular Multiobjective | Determine the daily Multiobjective | Integer routes of a fleet of Vehicle Linear trucks satisfying the Routing Programming requests of a set of

Problem MOILP model | customer, maximal

15

Simulated routes; time-windows

request of a particular type of trucks A.Osvald & A vehicle Metaheuristic Improvements of up L.Z Stim routing algorithm to 47% reduction in

algorithm for belonging to perished goods

distribution of | class of

vegetables accepting and similar algorithms perishable

food

D., Mercier, The Chance- Study the optimal

& Lefévre capacitated constrained solution cost vehicle Programming behaviour with routing and classical respect to the model problem with stochastic parameters evidential programming and customer demand

the belief constrained programming model, and with respect to

customer

demand specificity in the case of the recourse model Mingozzi A | Exact Lagrangean Consider the problem

and Toth P, algorithms for | Relaxation, of routing vehicles

16

N the vehicle Shortest stationed at a central Christofides routing Spanning facility (depot) to

based on Dynamic with known demands,

spanning tree Programming in such a way as to and shortest Relaxation minimize the total

Currently, the topic of supplying perishable items 1s a conundrum for the food market and other businesses in general, in order for products to reach customers as soon as potential And here are several investigations that involve algorithms to solve the issues mentioned above Delivery time, traffic conditions, and distance between delivery locations are all factors that must be optimized In 1959, Dantzig and Ramser proposed the Vehicles Routing Problem (VRP) VRP is the generic term for any collection of difficulties involving a set of routes for a fleet of vehicles at one or more depots The VRP's goal is to provide the cheapest route possible to service all clients They devised a mathematical programming approach to solve the problem of delivering petrol to service stations, which is known as a real-world concern After that, a small group of mathematicians with a strong interest in VRP was formed(Laporte et al.,1991) This is the fundamental definition of VRP

Let G =(V, A) be a graph where V = {1, .,n}1s a set of representing cities with the depot located at vertex 1, and A is the set of arcs With every are (1, )1#] is associated a non- negative distance matrix C = (ci) In some contexts, cij can be interpreted as a travel cost or as a travel time When C is symmetrical, it 1s often convenient to replace A by a set E of 10 undirected edges In addition, assume

there are m available vehicles based at the depot, where mL < m< mU When mL=mJU, mis said to be fixes When mL = 1 and mU =n-1, mis said to be free When m is not fixed, it often makes sense to associate a fixed cost f on the use

of a vehicle For the sake of simplicity, we will ignore these costs and unless

otherwise specified, we assume that all vehicles are identical and have the same

capacity D The VRP consists of designing a set of least-cost vehicle routes in such a way that

(1) each city in V\ {1} is visited exactly once by exactly one vehicle; (11) all vehicle routes start and end at the depot;

(111) some inside constraints are satisfied

Capacitated Vehicle Routing Problem (CVRP) is a specialized form of the VRP 1n which a fleet of vehicles located in a depot should meet the various demands of a group of customers for goods delivery The purpose in CVRP is to minimize the total cost (for example, a weighted function of the vehicles and the distance to be covered by them) of service delivery to a set of customers is met once and only by one vehicle.[1]

(El-Sherbeny, 2001) The vehicle routing problem with time windows has been solved with a multi-objective simulated annealing (MOSA) method Three categories of objectives are discussed: concerning the vehicle used (number of vehicles, number of covered/uncovered vehicles), concerning time (total duration of the routes, the homogeneity of the duration of the routes, working time not used, total waiting times due to time windows constraints), and concerning the flexible duration of the routes The exact methods for the VRPTW can be classified into three categories: lagrange relaxation-based methods, column generation and dynamic programming Exact methods often perform very poorly (in some cases taking days or more to find moderately decent, let alone optimal, solutions even to fairly small instances) [2] (Hosseinabadi, 2017) The Capacitated Vehicle Routing Problem (CVRP) is a specific variant of the VRP in which a fleet of vehicles situated in a depot must fulfil the diverse products delivery requests of a set of clients The goal of CVRP is to minimise the overall cost (for example, a weighted function of the vehicles and the distance to be travelled by them) of service delivery to a client base

Some algorithms to solve the CVRP, such as branch and bound methods, can

currently only consistently solved in problems containing up to 50 customers The best available exact approach for the CVRP is constituted by branch-and- cut algorithms which have been shown to solve problems with over 100 customers (Cordeau,2004) [3]

(Osvald & Stirn, 2008) In the Slovenian market, a quick distribution of fresh

vegetables is required since, of the approximately 151,571,000 kg of fresh vegetables consumed per year, between 50% and 70% are imported, mainly from Italy and Spain When they arrive in Slovenia, they are first delivered to the distribution centers and then distributed to the final consumers who can acquire the product in optimal conditions only 48 hours after the harvesting In the transportation of vegetables, insulated vehicles are used for international transportation and non-insulated vehicles for the final distribution An algorithm for the distribution of fresh vegetables in which the perishability represents a critical factor was developed This problem was formulated as a vehicle routing problem with time windows and time-dependent travel-times (VRPTWTD) where the travel-times between two locations depends on both the distance and on the time of the day Using parameters typical of the Slovenian food market, different schedules were achieved, giving improvements of up to 47% reduction in perishable goods [4]

Author D., Mercier, & Lefévre, E (2017), propose to represent uncertainty on

customer demands in the Capacitated Vehicle Routing Problem (CVRP) using the theory of evidence To tackle this problem, we extend classical stochastic programming modelling approaches Specifically, we propose two models for this problem The first model is an extension of the chance-constrained programming approach, which imposes certain minimum bounds on the belief and plausibility that the sum of the demands on each route respects the vehicle capacity The second model extends the stochastic programming with recourse approach: for each route, it represents by a belief function the uncertainty on its recourses, 1.¢., corrective actions performed when the vehicle capacity 1s