Cost Optimization Analysis Using North West Corner and Vogel's Approximation Methods at CV Mitra Visi Persada

Abstract

Background: The success of cost optimization in distribution logistics largely depends on the choice of effective methods to minimize expenses while maintaining service quality.
Purpose: This research aims to optimize shipping costs at CV Mitra Visi Persada by applying the North West Corner and Vogel's Approximation methods, focusing on identifying the most efficient solution.
Design/methodology/approach: The study employs a quantitative descriptive approach, analyzing shipping data from 2022 and 2023 using QM for Windows V5 software. Transportation optimization models were constructed, and cost calculations were conducted using both methods, North West Corner (NWC) Method and Vogel’s Approximation Method (VAM)
Findings/Result: The results show that by applying these optimization methods, shipping costs were reduced from IDR307,016,000 to IDR197,120,600, achieving potential annual savings of IDR109,895,400. The verification indicates that both North West Corner and Vogel's Approximation methods provide feasible and effective solutions for cost minimization.
Conclusion: This study's findings support the feasibility of implementing quantitative optimization strategies to enhance distribution efficiency at CV Mitra Visi Persada.
Originality/value: This research is original in its practical application of two classical transportation methods within the operational context of a medium-scale logistics company, demonstrating clear financial impact.

Keywords: cost optimization, distribution, north west corner, transportation method, vogel's approximation