Design and evaluation of an integrated inventory and transportation system

This paper proposes the adoption of an integrated inventory and transportation system (IITS) to minimize the total costs of inventory and transportation. A non-linear programing is developed by analyzing transportation and inventory costs with one supplier and many retailers in the distribution environment. The paper compares the proposed model with the traditional approach in computing total costs with numerical data. The results indicate that the total costs can be optimized by adopting integrated programing rather than the traditional approach, along with achieving improved customer service levels. In particular, sensitivity analysis is applied to determine the performance of the IITS under various transportation costs, holding costs and shortage costs. It shows that the transportation cost per unit is most sensitive in the proposed model. In this situation, the IITS is more effective for cost saving when set-up cost, holding and shortage costs are high, but is less effective for situations involving high per-unit transportation costs.     

Reversing port rotation directions in a container liner shipping network

Reversing port rotation directions of ship routes is a practical alteration of container liner shipping networks. The port rotation directions of ship routes not only affect the transit time of containers, as has been recognized by the literature, but also the shipping capacity and transshipment cost. This paper aims to obtain the optimal port rotation directions that minimize the generalized network-wide cost including transshipment cost, slot-purchasing cost and inventory cost. A mixed-integer linear programming model is proposed for the optimal port rotation direction optimization problem and it nests a minimum cost multi-commodity network flow model. The proposed model is applied to a liner shipping network operated by a global liner shipping company. Results demonstrate that real-case instances could be efficiently solved and significant cost reductions are gained by optimization of port rotation directions.     

In Search of the Link between Ship Size and Operations

Abstract

Since 1990s the liner shipping industry has faced a period of restructuring and consolidation, and been confronted with a continuing increase in container vessel scale. The impact of these changes is noticeable in trade patterns, cargo handling methods and shipping routes, in short ‘operations’. After listing factors influencing size, growth in container ship size is explained by economies of scale in deploying larger vessels. In order to quantify economies of scale, this paper uses the liner service cash flow model. A novelty in the model is the inclusion of +6000-20-foot Equivalent Unit (TEU) vessels and the distinction in costs between single and twin propeller units on ships. The results illustrate that scale economies have been – and will continue to be – the driving force behind the deployment of larger container vessels. The paper then assesses the link between ship size and operations, given current discussions about the increase in container vessel scale. It is found that (a) ship size and operations are linked; (b) optimal ship size depends on transport segment (deep-sea vs. short-sea shipping, SSS), terminal type (transhipment terminals vs. other terminals), trade lane (East-West vs. North-South trades) and technology; and (c) a ship optimal for one trade can be suboptimal for another.     

Determining vehicle dispatch frequency when shipping frequency differs among suppliers

Collecting is a way to consolidate freight that involves trucks picking up material from more than one supplier on each trip to a single destination. Earlier research resulted in a method that optimizes collecting vehicle dispatch frequency and that assumes that all suppliers are visited on each dispatch. This paper develops a method that determines the optimal dispatch frequency when large suppliers are visited more frequently than are small suppliers. This added flexibility allows the combined inventory and transportation costs of collecting to be reduced. The method is developed analytically and illustrated with an example.     

Storage space allocation in container terminals

Container terminals are essential intermodal interfaces in the global transportation network. Efficient container handling at terminals is important in reducing transportation costs and keeping shipping schedules. In this paper, we study the storage space allocation problem in the storage yards of terminals. This problem is related to all the resources in terminal operations, including quay cranes, yard cranes, storage space, and internal trucks. We solve the problem using a rolling-horizon approach. For each planning horizon, the problem is decomposed into two levels and each level is formulated as a mathematical programming model. At the first level, the total number of containers to be placed in each storage block in each time period of the planning horizon is set to balance two types of workloads among blocks. The second level determines the number of containers associated with each vessel that constitutes the total number of containers in each block in each period, in order to minimize the total distance to transport the containers between their storage blocks and the vessel berthing locations. Numerical runs show that with short computation time the method significantly reduces the workload imbalance in the yard, avoiding possible bottlenecks in terminal operations.     

Profit-based maritime container assignment models for liner shipping networks

We propose the problem of profit-based container assignment (P-CA), in which the container shipment demand is dependent on the freight rate, similar to the “elastic demand” in the literature on urban transportation networks. The problem involves determining the optimal freight rates, the number of containers to transport and how to transport the containers in a liner shipping network to maximize the total profit. We first consider a tactical-level P-CA with known demand functions that are estimated based on historical data and formulate it as a nonlinear optimization model. The tactical-level P-CA can be used for evaluating and improving the container liner shipping network. We then address the operational-level P-CA with unknown demand functions, which aims to design a mechanism that adjusts the freight rates to maximize the profit. A theoretically convergent trial-and-error approach, and a practical trial-and-error approach, are developed. A numerical example is reported to illustrate the application of the models and approaches.     

Supplying a single location from heterogeneous sources

This paper studies how items with different characteristics, and being demanded at different rates from a finite number of supply points, should be transported to a common destination. The items may differ in size and value, and the origins may differ in their spatial distribution, the kind of items they produce and the production rate. Depending on the application context, the common destination can represent a warehouse, a factory, a military base, a break-bulk terminal, a port or another kind of transportation terminal. Different kinds of items may call for separate transportation treatment if, for example, the items have sharply different inventory carrying costs or their origins are not equally scattered. On the other hand, if their characteristics are not very different, they may be transported together more cheaply because of existing economies of scale. In fact, in most applications it should be optimal to use only a few transportation systems because the economies of scale are quite strong. The paper essentially shows that origins can be ranked according to a simple criterion, and that if two origins are served together, the ones ranked in between should be served with them. A simple method for determining the optimal number of transportation systems and the sources served by each is developed. The technique is illustrated with a numerical example. The results of the paper are developed assuming that supply points do not cluster together by type and that the density of suppliers is slowly varying. In any practical application in which these assumptions are not reasonable approximations, the results of this paper should not be applied too literally. Nevertheless, they can still be used as guidelines in the search for an optimum supply strategy.     

Synchronized Production and Transportation Planning Using Subcontracted Vehicles in a Production-Distribution Network

Abstract

Effective management of interfaces between procurement, supply, production and distribution for higher efficiency in the supply chain is an important issue in global manufacturing, where the synchronization of production and transportation planning represents important savings in operational costs. This paper focuses on the synchronization of production planning and transportation planning in a production distribution network, where transportation is subcontracted to a professional transportation enterprise (PTE) for vehicle-hiring. Dynamic and flexible numbers of vehicles are used to cater for fast changing market demands. Thus, the number of vehicles to be hired is viewed from the planning point of view as an operational decision considered simultaneously with production and transportation planning. A mathematical model – SPTP/MTDS – for synchronized production and transportation planning under multiple times and direct shipping strategy (MTDS) is discussed, and a Lagrange relaxation decomposition-based two layer decision procedure (LRD-TLDP) is developed. By introducing artificial decision variables and Lagrange multipliers, SPTP/MTDS is decomposed into a production decision sub-problem (SPTP-PD), and a distribution decision sub-problem (SPTP-DD). A priority-based assignment heuristic and a partial chain-based genetic algorithm are developed to solve SPTP-PD and SPTP-DD, respectively. An illustration of the application of the model in an electronic appliance manufacturing enterprise in China is presented.     

A continuous approximation model for time definite many-to-many transportation

Time definite freight transportation carriers provide very reliable scheduled services between origin and destination terminals. They seek to reduce transportation costs through consolidation of shipments at hubs, but are restricted by the high levels of service to provide less circuitous routings. This paper develops a continuous approximation model for time definite transportation from many origins to many destinations. We consider a transportation carrier serving a fixed geographic region in which demand is modeled as a continuous distribution and time definite service levels are imposed by limiting the maximum travel distance via the hub network. Analytical expressions are developed for the optimal number of hubs, hub locations, and transportation costs. Computational results for an analogous discrete demand model are presented to illustrate the behavior observed with the continuous approximation models.     

A combined land use-transportation model when zonal travel demand is endogenously determined

A combined transportation-land use model is proposed in this paper. Unlike other existing urban land use and transportation planning models in which a “fixed demand” for services is assumed to be known at the zonal level of an urban area, zonal travel demand is endogenously determined together with link congestion costs, optimal amounts of production and resulting efficient densities of land uses, once the transportation network is given. Some characteristics of alternative solutions are demonstrated. The proposed model represents progress over previous efforts in combining land use-transportation problems since the travel choice as to origin, destination and routes as well as amounts of goods to be produced at the optimal density of land uses are integrated into a consistent mathematical programming framework.     

Rail line length in a crosstown corridor with many-to-many demand

An analytical model that determines the optimal location and length of rail line along a crosstown transportation corridor with the objective of minimizing the total transportation cost is presented. A general, many-to-many passenger demand pattern is considered. The objective function, which includes the rail and bus riding costs, rail and bus operating costs, rail fleet costs and rail line costs, is minimized by using the classical optimization method with the aid of a computer program developed for the model. The model is applied to the Northwest-South transportation corridor in Calgary, Alberta, and the sensitivity of the optimal rail line location and length to the unit cost and demand parameters at their reasonable ranges is tested. It is found that although the total passenger demand, unit rail line cost, and unit bus operating cost have greater influence than the unit bus and rail riding costs, and unit rail fleet and operating costs, the optimal line length is generally insensitive to all these parameters. It is also found that the length of the existing LRT line in the corridor is comparable to the optimal line length obtained from the model, but the existing line should be extended further south in order to meet the heavier demand in that direction optimally.     

Estimation of the perceived value of transit time for containerized cargoes

This paper proposes a novel method for estimating the perceived value of transit time of containers by shipping lines. The key idea is that a shipping line’s published schedule is the optimal decision that minimizes the sum of fuel cost and time-associated costs of the containers adopted by the shipping line. Using the proposed method, we find that the adopted values of transit time for nine trans-Pacific services operated by Orient Overseas Container Line and five trans-Pacific services operated by Maersk Line are between US$5/TEU/day and US$30/TEU/day. We further demonstrate how the adopted value can be used for designing the optimal transit times between ports, analyzing the viability of slow-steaming, checking whether ships should speed up to catch up to connecting ships on other services, and helping to predict the market share of less polluting fuels in view of rules on air emission.     

Service-cost tradeoffs for carload freight traffic in the U.S. rail industry

Railroad technology permits a single train to move a large number of individual freight cars. However, cars which are not in dedicated unit train or intermodal service experience considerable delay due to the consolidation and breakup of trains. Rail operations thus involve a tradeoff between the economies of shipment consolidation, and the resulting delays. More direct and/or more frequent train connections will increase costs, but reduce transit times. This article quantifies the cost of providing a range of transit times for general carload traffic for several representative U.S. rail systems. It shows that significant reductions in transit time will require a large increase in the number of train connections and operating cost. Changes in labor contracts to reduce train crew cost will provide some incentive for higher service levels, but reductions in crew cost alone cannot be expected to dramatically improve the performance of the carload segment of the industry.     

Optimal recharging strategies for electric vehicle fleets with duration constraints

Electrical vehicles (EVs) have become a popular green transportation means recently because they have lower energy consumption costs and produce less pollution. The success of EVs relies on technologies to extend their driving range, which can be achieved by the good deployment of EV recharging stations. This paper considers a special EV network composed of fixed routes for an EV fleet, where each EV moves along its own cyclic tour of depots. By setting up a recharging station on a depot, an EV can recharge its battery for no longer than a pre-specified duration constraint. We seek an optimal deployment of recharging stations and an optimal recharging schedule for each EV such that all EVs can continue their tours in the planning horizon with minimum total costs. To solve this difficult location problem, we first propose a mixed integer program (MIP) formulation and then derive four new valid inequalities to shorten the solution time. Eight MIP models, which were created by adding different combinations of the four valid inequalities to the basic model, have been implemented to test their individual effectiveness and synergy over twelve randomly generated EV networks. Valuable managerial insights into the usage of valid inequalities and the relations between the battery capacity and the total costs, number of recharging facilities to be installed, and running time are analyzed.     

Truck capacity analysis in a cross‐dock transportation network considering direct shipment

In a transportation network, decision making parameters may change and may cause the optimum value of objective function to vary in a specific range. Therefore, managers try to identify the effects of these changes by sensitive analysis to find appropriate solutions. In this paper, first, a model for cross‐dock transportation network considering direct shipment is presented, and then an algorithm based on branch and bound algorithm and dual price concept for sensitive analysis is developed. When managers encounter problems such as budget limit, they may decide to change the capacity of trucks as a procedure to reduce the transportation costs of the network. The algorithm provides a useful lower bound on the solutions of the problems and makes it easy for the managers to eliminate inappropriate options of truck capacities, which cannot lead to cost reduction. To verify the algorithm, an example will be given at the end of the paper. Copyright © 2013 John Wiley & Sons, Ltd.     

External Costs of Domestic Container Transportation: Short‐Sea Shipping versus Trucking in Taiwan

Abstract

This paper explores the external costs of domestic container transportation in Taiwan by analysing the origin and destination of current container cargoes. After reviewing an extensive literature survey of methods of external cost, a comparison of external costs between trucking and short sea shipping (SSS) by corridor is made by using a model developed in this paper. Based on the findings that external costs of SSS are considerably lower than truck transport and can be a viable alternative to current domestic container cargo transportation, we discuss the significance and managerial implications of SSS from the perspective of green logistics. In so doing, a top‐down approach is employed for developing government policies, which aim to not only reduce the external costs of domestic container transportation but also promote SSS in Taiwan.     

Segment-based alteration for container liner shipping network design

Container liner shipping companies only partially alter their shipping networks to cope with the changing demand, rather than entirely redesign and change the network. In view of the practice, this paper proposes an optimal container liner shipping network alteration problem based on an interesting idea of segment, which is a sequence of legs from a head port to a tail port that are visited by the same type of ship more than once in the existing shipping network. In segment-based network alteration, the segments are intact and each port is visited by the same type of ship and from the same previous ports. As a result, the designed network needs minimum modification before implementation. A mixed-integer linear programming model with a polynomial number of variables is developed for the proposed segmented-based liner shipping network alternation problem. The developed model is applied to an Asia–Europe–Oceania liner shipping network with a total of 46 ports and 11 ship routes. Results demonstrate that the problem could be solved efficiently and the optimized network reduces the total cost of the initial network considerably.     

Cost analysis for high-volume and long-haul transportation of densified biomass feedstock

Using densified biomass to produce biofuels has the potential to reduce the cost of delivering biomass to biorefineries. Densified biomass has physical properties similar to grain, and therefore, the transportation system in support of delivering densified biomass to a biorenery is expected to emulate the current grain transportation system. By analyzing transportation costs for products like grain and woodchips, this paper identifies the main factors that impact the delivery cost of densified biomass and quantifies those factors’ impact on transportation costs. This paper provides a transportation-cost analysis which will aid the design and management of biofuel supply chains. This evaluation is very important because the expensive logistics and transportation costs are one of the major barriers slowing development in this industry.Regression analysis indicates that transportation costs for densified biomass will be impacted by transportation distance, volume shipped, transportation mode used, and shipment destination, just to name a few. Since biomass production is concentrated in the Midwestern United States, a biorefinery’s shipments will probably come from that region. For shipments from the Midwest to the Southeast US, barge transportation, if available, is the least expensive transportation mode. If barge is not available, then unit trains are the least expensive mode for distances longer than 161 km (100 miles). For shipments from the Midwest to the West US, unit trains are the least expensive transportation mode for distances over 338 km (210 miles). For shorter distances, truck is the least expensive transportation mode for densified biomass.     

Characteristics of multi-shop/ multi-termal delivery routes, with backghauls and unique items

This paper creates and evaluates spatial models for multiple stop delivery routes that are allowed to begin and end at separate terminals. Each terminal must deliver a set of unique items. These deliveries can be coordinated with deliveries from other terminals to form back-haul loops. The paper assumes that stops are uniformly distributed over a large region and that a strip-routing strategy is followed. Among the findings are that the optimal orientation of a delivery district is defined by the ellipse passing through the routing district and having the terminals as foci. The paper also determines optimal district shape, and determines which districts should be traveled in a single pass (entering and exiting at opposite ends), and which should be traversed in two passes (entering and exitin from the same end).     

Traffic consolidation in East Asian container ports: A network flow analysis

The proliferation of hub-and-spoke operations in maritime container transportation has resulted in the widespread consolidation of traffic flows. Utilising liner shipping network configurations, this paper assesses the impact of freight traffic consolidation in the container port industry by exploring the spatial pattern of traffic flow movements and identifying the variety of roles that container ports play within this context. On the basis of the network concept, the spatial inequality of freight traffic consolidation is determined by the density and direction of all meaningful connections (i.e. significant flows) identified by applying Multiple Linkage Analysis (MLA) to an initial traffic flow matrix.The effectiveness of the chosen methodology is tested empirically using a sample comprising the 18 major container ports in East Asia, together with another 21 important container ports located on the East–West trading route. Based on this sample network, the spatial structure of traffic flow consolidation reveals the nature and structure of hub-and-spoke operations within a port system, the relative hub-dependence of ports, the variety of roles which individual ports play within the overall structure of inter-port interactions and the hierarchical configuration of the port industry structure. The paper concludes that MLA offers new insights into the distributional inequality of traffic flows, the spatial and economic interactions between ports and the extent to which hinterlands overlap. Furthermore, the analysis clearly shows that inter-port relationships can no longer be evaluated as isolated phenomena; any change in a specific port’s competitiveness will directly impact upon the structure of the whole maritime transportation system. Port authorities and terminal operators will need, therefore, to carefully analyse and disentangle specific inter-port relationships in order to provide the most appropriate basis for their decision making.