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    Transport Decision

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    Lilla Yuniar Suksmana
    Transport decisions involve selecting transport services, private fleet planning, and freight consolidation. Key considerations in transport service selection include balancing costs and inventory levels. Carrier routing aims to find the shortest and lowest cost routes between origin and destination points. Routing problems become more complex when dealing with multiple points, coincident points, or multiple vehicles. Effective routing and scheduling follows guidelines like clustering nearby stops and designing routes in a tear-drop pattern. Freight consolidation analyzes combining small shipments to take advantage of rate discounts for larger loads.

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    © All Rights Reserved
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    Transport Decision

    Uploaded by

    Lilla Yuniar Suksmana
    113 views31 pages
    Transport decisions involve selecting transport services, private fleet planning, and freight consolidation. Key considerations in transport service selection include balancing costs and inventory levels. Carrier routing aims to find the shortest and lowest cost routes between origin and destination points. Routing problems become more complex when dealing with multiple points, coincident points, or multiple vehicles. Effective routing and scheduling follows guidelines like clustering nearby stops and designing routes in a tear-drop pattern. Freight consolidation analyzes combining small shipments to take advantage of rate discounts for larger loads.

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    supply chain management

    Original Title

    transport decision

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    Transport decisions involve selecting transport services, private fleet planning, and freight consolidation. Key considerations in transport service selection include balancing costs and inventory levels. Carrier routing aims to find the shortest and lowest cost routes between origin and destination points. Routing problems become more complex when dealing with multiple points, coincident points, or multiple vehicles. Effective routing and scheduling follows guidelines like clustering nearby stops and designing routes in a tear-drop pattern. Freight consolidation analyzes combining small shipments to take advantage of rate discounts for larger loads.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    113 views31 pages

    Transport Decision

    Uploaded by

    Lilla Yuniar Suksmana
    Transport decisions involve selecting transport services, private fleet planning, and freight consolidation. Key considerations in transport service selection include balancing costs and inventory levels. Carrier routing aims to find the shortest and lowest cost routes between origin and destination points. Routing problems become more complex when dealing with multiple points, coincident points, or multiple vehicles. Effective routing and scheduling follows guidelines like clustering nearby stops and designing routes in a tear-drop pattern. Freight consolidation analyzes combining small shipments to take advantage of rate discounts for larger loads.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 31
    At a glance
    Powered by AI
    The document discusses various transport strategy concepts including transport decisions, inventory strategy, location strategy, and freight consolidation. It also provides examples and analyses of transport service selection and vehicle routing problems.

    Some of the typical transport decisions discussed include transport service selection, private fleet planning, vehicle routing from multiple points and coincident origin-destination points, and freight consolidation.

    The methods discussed for selecting transport services include indirectly through network configuration, directly through channel simulation, and directly through a spreadsheet approach comparing alternatives based on cost types like transportation, in-transit inventory, source inventory, and destination inventory.

    Transport Decisions

    If you are planning for one year, grow rice. If you are planning for 20 years, grow trees. If you are planning for centuries, grow men. A Chinese proverb

    Chapter 7
    CR (2004) Prentice Hall, Inc.

    7-1

    Transport Decisions in Transport Strategy


    Inventory Strategy Forecasting Inventory decisions Purchasing and supply Customer scheduling decisions service goals Storage fundamentals The product Storage decisions Logistics service Ord. proc. & info. sys.

    Location Strategy Location decisions The network planning process

    CR (2004) Prentice Hall, Inc.

    CONTROLLING
    7-2

    ORGANIZING

    PLANNING

    Transport Strategy Transport fundamentals Transport decisions

    Typical Transport Decisions


    Transport Service selection Private fleet planning

    - Vehicle routing - Routing from multiple points - Routing from coincident origin-destination points - Vehicle routing and scheduling
    Freight consolidation
    Just a few of the many problems in transportation
    CR (2004) Prentice Hall, Inc.

    7-3

    Transport Service selection


    Basic Cost Trade-Off - Balance performance effects on inventory against the cost of transport Methods for selection - Indirectly through network configuration - Directly through channel simulation - Directly through a spreadsheet approach as follows:
    Cost types Transportation In-transit inventory Source inventory Destination inventory
    CR (2004) Prentice Hall, Inc.

    Alternatives Air Truck Rail

    7-4

    Mode/Service Selection (Contd)


    Example Finished goods are to be shipped from a plant inventory to a warehouse inventory some distance away. The expected volume to be shipped in a year is 1,200,000 lb. The product is worth $25 per lb. and the plant and carrying costs are 30% per year.

    Other data are:


    Transport choice Rail Truck Air
    CR (2004) Prentice Hall, Inc.

    Rate, $/lb. 0.11 0.20 0.88

    Transit time, days 25 13 1

    Shipment size, lb. 100,000 40,000 16,000

    7-5

    Transport Selection Analysis


    Cost type Computation Rail .11(1,200,000) = $132,000 Truck .20(1,200,000) = $240,000 Air .88(1,200,000) = $1,056,000 TransRD portation In-transit ICDT inventory 365

    [.30(25) [.30(25) [.30(25) 1,200,000(25)]/365 1,200,000(13)]/365 1,200,000(1)]/365 = $616,438 = $320,548 = $24,658 [.30(25) 100,000]/2 = $375,000 [.30(25.11) 100,000]/2 = $376,650 $1,500,088 [.30(25) 40,000]/2 = $150,000 [.30(25.20) 40,000]/2 = $151,200 $ 861,748 [.30(25) 16,000]/2 = $60,000 [.30(25.88) 16,000]/2 = $62,112 $1,706,770
    7-6

    ICQ Plant inventory 2


    IC' Q Whse inventory 2
    Include transport rate

    Totals
    CR (2004) Prentice Hall, Inc.

    Improved service

    Carrier Routing
    Determine the best path between origin and destination points over a
    network of routes

    Shortest route method is efficient for finding the minimal cost route Consider a time network between Amarillo and Fort Worth. Find the
    minimum travel time.

    The procedure can be paraphrased as:


    - Find the closest unsolved node to a solved node - Calculate the cost to the unsolved node by adding the accumulated cost to the solved node to the cost from the solved node to the unsolved node. - Select the unsolved node with the minimum time as the new solved node. Identify the link.
    -

    When the destination node is solved, the computations stop. The solution is found by backtracking through the connections made.
    7-7

    CR (2004) Prentice Hall, Inc.

    Carrier Routing (Contd)


    Origin Amarillo A 90 minutes 138 C 348 156 B 84 E 84

    Oklahoma City I

    66 90

    120

    132 126

    60 H 126 132 48 J Destination Fort Worth

    Can be a weighted index of time and distance


    48 D Note : All link times are in minutes

    150 G

    CR (2004) Prentice Hall, Inc.

    7-8

    1 2

    174

    BE *

    228

    CF

    258

    EI*

    288

    FH

    294

    CD

    384

    IJ*

    CR (2004) Prentice Hall, Inc.

    Shortest Route Method


    7-9

    Step

    Solved Nodes Directly Connected to Unsolved Nodes A A B A B C A C E A C E F A C F I A C F H I H I

    Its Closest Connected Unsolved Node B C C D E F D F I D D I H D D H J D D G G J J J

    Total Cost Involved 90 138 90+66=156 348 90+84=174 138+90=228 348 138+90=228 174+84=258 348 138+156=294 174+84=258 228+60=288 348 138+156=294 228+60= 288 258+126=384 348 138+156=294 288+132=360 288+48=336 258+126=384 288+126=414 258+126=384

    nth Nearest Node B C

    Its Minimu m Cost 90 138

    Its Last Connection a AB * AC

    MAPQUEST SOLUTION

    Mapquest at www.mapquest.com
    CR (2004) Prentice Hall, Inc.

    7-10

    Routing from Multiple Points


    This problem is solved by the traditional transportation method of linear programming
    4a Supplier A Supply 400 6 5 5 Supplier B Supply 700 5 9 5 8 Supplier C Supply 500
    a

    Plant 1 Requirements = 600

    Plant 2 Requirements = 500

    Plant 3 Requirements = 300

    CR (2004) Prentice Hall, Inc.

    . The transportation rate in $ per ton for an optimal routing between supplier A and plant 1 7-11

    TRANLP problem setup

    Solution

    CR (2004) Prentice Hall, Inc.

    7-12

    Routing with a Coincident Origin/Destination Point


    Typical of many single truck routing problems from a single depot. Mathematically, a complex problem to solve efficiently. However, good routes can be found by forming a route pattern where the paths do not cross a "tear drop" pattern.

    D
    Depot (a) Poor routing-paths cross

    D
    Depot (b) Good routing-no paths cross

    CR (2004) Prentice Hall, Inc.

    7-13

    Single Route Developed by ROUTESEQ in LOGWARE


    Y coordinates 8 8 Y coordinates 9 10 13 16 19 7 6 4

    7
    6 5 42

    9
    10 6 8 5

    13 16
    19 15 18 20

    6
    8

    15
    18 D 12

    20 5
    42 3 2 3

    3
    2 3

    17

    12

    17

    1
    01 0

    7 1 2

    11 14

    1 7
    01 8 0 1 2

    11 14 6 7 8

    3 4 5 X coordinates

    3 4 5 X coordinates

    (a) Location of beverage accounts and distribution center (D) with grid overlay
    CR (2004) Prentice Hall, Inc.

    (b) Suggested routing pattern


    7-14

    Multi-Vehicle Routing and Scheduling


    A problem similar to the single-vehicle routing
    problem except that a number of restrictions are placed on the problem. Chief among these are: A mixture of vehicles with different capacities Time windows on the stops Pickups combined with deliveries Total travel time for a vehicle

    CR (2004) Prentice Hall, Inc.

    7-15

    Practical Guidelines for Good Routing and Scheduling


    1. Load trucks with stop volumes that are in closest proximity to each other

    Stops

    D Depot (a) Weak clustering CR (2004) Prentice Hall, Inc.

    D Depot (b) Better clustering

    7-16

    Guidelines (Contd)
    2. Stops on different days should be arranged to produce tight clusters
    F F F F Stop F T T T T F F T F T T F F T T F F F F T T T T T

    May need to (a) Weak clustering-- coordinate with routes cross sales to achieve clusters
    CR (2004) Prentice Hall, Inc.

    D Depot

    D Depot (b) Better clustering

    7-17

    Guidelines (Contd)
    3. Build routes beginning with the farthest stop from the depot 4. The stop sequence on a route should form a teardrop pattern (without time windows) 5. The most efficient routes are built using the largest vehicles available first

    6. Pickups should be mixed into delivery routes rather than assigned to the end of the routes
    7. A stop that is greatly removed from a route cluster is a good candidate for an alternate means of delivery 8. Narrow stop time window restrictions should be avoided (relaxed)
    7-18

    Application of Guidelines to Casket Distribution

    Warehouse Funeral home


    CR (2004) Prentice Hall, Inc.

    Typical weekly demand and pickups

    7-19

    Application of Guidelines to Casket Distribution (Contd)


    Territories of equal size to minimize number of trucks

    Warehouse Funeral home


    CR (2004) Prentice Hall, Inc.

    Division of sales territories into days of the week

    7-20

    Application of Guidelines to Casket Distribution (Contd)

    Warehouse Funeral home


    CR (2004) Prentice Hall, Inc.

    Route design within territories

    7-21

    Sweep Method for VRP


    Example A trucking company has 10,000-unit vans for merchandise pickup to be consolidated into larger loads for moving over long distances. A days pickups are shown in the figure below. How should the routes be designed for minimal total travel distance?

    CR (2004) Prentice Hall, Inc.

    7-22

    Stop Volume and Location


    Geographical region 1,000 4,000 3,000 2,000 3,000 3,000 2,000 Pickup points

    2,000

    1,000

    Depot 2,000

    2,000 2,000

    CR (2004) Prentice Hall, Inc.

    7-23

    Sweep Method Solution


    Sweep direction is arbitrary
    Route #1 1,000 10,000 units 4,000 3,000 2,000 3,000 3,000 2,000 Route #3 8,000 units

    2,000

    1,000 2,000

    Depot
    2,000 2,000

    Route #2 9,000 units


    CR (2004) Prentice Hall, Inc.

    7-24

    The Savings Method for VRP


    Stop
    dA,0 A d0,A B d0,A 0 Depot dB,0

    A dA,B B

    0
    Depot dB,0

    d0,B

    Stop (a) Initial routing (b) Combining two stops on a route Route distance = d 0,A +dA,0 +d0,B + dB,0 Route distance = d 0,A +dA,B +dB,0

    CR (2004) Prentice Hall, Inc.

    Savings is better than Sweep methodhas lower average error

    7-25

    Savings Method Observation


    The points that offer the greatest savings when combined on the same route are those that are farthest from the depot and that are closest to each other.

    This is a good principle for constructing multiple-stop routes


    CR (2004) Prentice Hall, Inc.

    7-26

    Route Sequencing in VRP


    AM 8 Truck #1 Truck #2 Truck #3 Truck #4 Truck #5 9 10 Route #1 Route #9 Route #5 Route #2 Route #7 Route #3 11 12 1 Route #10 2 PM 3 4 5 Route #6 6

    Route #4 Route #8

    Minimize number of trucks by maximizing number of routes handled by a single truck


    CR (2004) Prentice Hall, Inc.

    7-27

    Freight Consolidation
    Combine small shipments into larger
    ones

    A problem of balancing cost savings


    against customer service reductions

    An important area for cost reduction in


    many firms

    Based on the rate-shipment size


    relationship for for-hire carriers
    CR (2004) Prentice Hall, Inc.

    7-28

    Freight Consolidation Analysis


    Suppose we have the following orders for the next three days. From: Ft Worth Day 1 To: Topeka 5,000 lb. Kansas City 7,000 Wichita 42,000 Day 2 25,000 lb. 12,000 38,000 Day 3 18,000 lb. 21,000 61,000

    Consider shipping these orders each day or consolidating them into one shipment. Suppose that we know the transport rates.
    Note: Rates from an interstate tariff
    CR (2004) Prentice Hall, Inc.

    7-29

    Freight Consolidation Analysis (Contd)


    Separate shipments Topeka Kansas City Wichita
    a

    Day 1 Rate x volume = cost 3.42 x 50 = $171.00 3.60 x 70 = 252.00 0.68 x 420 = 285.60 Total $708.60

    Day 2 Rate x volume = cost 1.14 x 250 = $285.00 1.44 x 120 = 172.80 a 0.68 x 400 = 272.00 Total $729.80

    Ship 380 cwt., as if full truckload of 400 cwt.

    Day 3 Rate x volume = cost Topeka Kansas City Wichita 1.36 x 180 = $244.80 1.20 x 210 = 252.00 0.68 x 610 = 414.80

    Totals $700.80 676.80 972.40

    Total
    CR (2004) Prentice Hall, Inc.

    $911.60

    $2,350.00
    7-30

    Freight Consolidation Analysis (Contd)


    Consolidated shipment

    Computing transport cost for one combined, three-day shipment


    Day 3 Rate x volume = cost Topeka Kansas City Wichita
    a

    0.82 x 480 = $393.60 0.86 x 400 = 344.00 0.68 x 1410 = 958.80

    Total
    480 = 50 + 250 + 180

    $1,696.40
    Cheaper, but what about the service effects of holding early orders for a longer time to accumulate larger shipment sizes?

    CR (2004) Prentice Hall, Inc.

    7-31

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