Transportation General Concepts

Lecture 15ESD.260 Fall 2003

Caplice

MIT Center for Transportation & Logistics - ESD.260

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Transportation Operations

Consolidated operations (CO)Bus/rail transitLTLRailAirlinesOcean carriers/liner service

Package delivery

Direct operations (DO)TaxiTLUnit trainsCharter/private planesTramp servicesCourier

DO conveyances on CO carriers (sub-consolidation)Rail carsOcean containers Air “igloos”

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Core Transportation Activities

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Types of Transportation Systems

Based on Consolidation Used w/o TranshipmentPoint

One to OneOne to ManyMany to One Many to Many

With TranshipmentPointOne to ManyMany to OneMany to Many

Other IssuesDynamic TranshipmentPointsInterleavenedtripsPlanning versus Execution

MIT Center for Transportation & Logistics - ESD.260

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Solutions ApproachMath Programming Approach

Develop detailed objective function and constraintsRequires substantial data Solve MILP to optimality

Simulation ApproachDevelop detailed rules and relationshipsSimulate the expected demand patternsObserve results and rank different scenarios

Continuous Approximation Approach Develop a Logistics Cost Function (LCF) that incorporates the relevant decision variablesObtain reasonable results with as little information as possiblein order to gain insightsDetailed data can actually make the optimization process harder

MIT Center for Transportation & Logistics - ESD.260

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Time Space Diagram

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Cumulative Count Curve

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Logistics Cost Function

NomenclatureD = Annual demand (items/time)Cr = Rent cost ($/item-time)Ci = Inventory cost ($/item-time)Cf = Fixed transport cost ($/shipment)Cv = Variable transport cost (#/item)HMAX = Maximum headway (time)V = Shipment size (items)V = Total number of units shipped=ΣvvMAX = Maximum capacity for transport

mode (items)

Cs = Fixed cost per stop ($/stop)

Cd = Cost per distance ($/distance)

Cvd = Marginal cost per item per distance

Cvs = Marginal cost per item per stop

Ns = Number of deliverystops

Cvh = Variable handling costs ($/item)

Cfh = Fixed handling costs ($/pallet)

vhMAX = Maximum capacity for pallet or box (items)

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Holding Costs = R + I

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Move Costs = T + H

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Transport Costs

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Transport CostsRelation to Capacity

ft(V) is sub-additive: ft(V1+V2)≤ ft(V1)+ft(V2) CvVMAX<<Cf

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Transport CostsMultiple Modes

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Handling Costs

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Total Logistics Cost Function