A Comparative Application Regarding the Effects of Traveling Salesman Problem on Logistics Costs

Abstract

The necessity of transporting goods from production facilities to buyers requires every company to manage logistics. While the quantity of products ordered has been decreasing in recent years, the number of orders has been increasing. This situation leads to higher logistics costs and more attempts to control logistics costs by business managers. One way to decrease logistics costs is the optimization of traveled distances. The Traveling Salesman Problem (TSP) attempts to optimize travel distances by changing the order of the locations to be visited. By doing so, it reduces the logistics costs associated with travel distances. However, there are also some parameters of logistics costs that are not related to travel distances. This paper examines the effects of optimization results by TSP on logistics costs, using seven different methods to consider a real logistics problem, and comparing the results. Then it discusses the variation in logistics costs due to TSP.