Abstract

The aim of this study is to determine an optimal new factory location for a company based on the proximity of the new factory’s location to its customers and, in turn, reduce the cost related to deliveries. This was carried out using the transportation algorithm via the excel solver tool. This takes into account variables such as  distance from customers, weight of the goods, as well as vehicle-based and driver-based costs, in order to determine the most cost effective location of a new factory. The current factory for the company case study is based in Pinetown and Kwa-Zulu Natal in South Africa. The proposed factory locations are Pietermaritzburg, Durban Central or another in Pinetown, all within Kwa-Zulu Natal. Based on the results, the optimal location to establish a new factory would be Pietermaritzburg, KwaZulu Natal. This location combined with the current factory location will generate the lowest cost with regards to vehicle-based and driver-based costs when delivering goods.