Drug Distribution Cost Optimization with Vogel, Russel, and Northwest Corner Approaches
DOI:
https://doi.org/10.32938/jpm.v7i1.9501Keywords:
VAM, RAM, NWC, Steppingstone, MODIAbstract
The increase in annual turnover in a drug distribution company reflects positive growth but is often accompanied by a significant increase in operating costs that can reduce profit margins if not managed efficiently. This study aims to optimize distribution costs using a transportation method approach by comparing three initial solution methods, namely Vogel's Approximation Method (VAM), Russell Approximation Method (RAM), and Northwest Corner Method (NWC). The study was conducted at a drug distribution company with three central warehouses serving four distribution branches, based on distribution data for December 2024, which was arranged in the form of a transportation table. From the calculation results, the VAM method produced the lowest total distribution cost of IDR23,426,407. Evaluation of this solution was carried out using the Steppingstone method and the Modified Distribution Method (MODI) to determine whether the solution was optimal. The evaluation results show that all opportunity cost values are positive, which means that no additional iterations or re-allocations are required so that the solution from the VAM method can be stated as an optimal solution. The novelty of this study lies in the integration of three initial solution methods with two optimal solution methods in one drug distribution case study, which has not been widely discussed in an integrated manner in previous studies. These findings provide strategic contributions to more precise and efficient logistics decision-making and support the sustainable operational growth of pharmaceutical distribution companies.
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