Summary
Shipment consolidation, a commonly used strategy in freight transportation, is the practice of consolidating several small items and then dispatching them on the same vehicle. If applied appropriately, a shipment consolidation program may drive out substantial costs in the logistics supply chain. However, the optimal policy for such a consolidation program in a random setting is not yet fully investigated in the literature. In this paper, we study three alternative systematic shipment consolidation programs: Time Policy, Quantity Policy, and Hybrid Policy. We consider, for one echelon of a logistics supply chain, a freight-arrival process that is Poisson and unit-sized. Accordingly, we analyze these policies and obtain structural results for which one policy is superior to the others, on the basis of total cost per order.
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Comparison of Typical Shipment Consolidation Programs: Structural Results
(ProQuest: ... denotes formulae omitted.)
1. INTRODUCTIONShipment consolidation (SCL) is a logistics strategy that combines two or more orders or shipments so that a larger quantity can be dispatched on the same vehicle. This enables considerable economies of scale, greatly reducing the transportation cost per unit weight. The challenge however is to determine a program/policy for shipping the consolidated load that still gives a good service to the customers whose orders are among the first to be placed. In the literature, several SCL policies have been studied using techniques such as simulation, renewal theory, mathematical programming, and queuing theory. The impact of cost savings and the value added by these policies in t...See the full content of this document
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