Strategic analysis of the dairy transportation problem

The dairy transportation problem (DTP) consists of determining the best routes to be performed for collecting milk from farms and delivering it to processing plants. We study the particular case of the province of Quebec, where the Fédération des producteurs de lait du Québec is responsible for negotiating the transportation costs on behalf of producers. Several issues are highlighted in the actual process of designing contracts such as using historical data. We propose an approach based on scenario analysis that consists of revising both the steps and the information used to construct the routes. We develop a generalized tabu search algorithm that integrates the different characteristics of the DTP.