Alternate mode dispatching: the impact of cost minimisation
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Alternate mode dispatching: the impact of cost minimisation D Ronen University of Missouri±St. Louis When a shipper may use a variety of trucks to ship less-than-truckload shipments, shipping cost is the relevant criterion for evaluating alternate dispatches. This point is demonstrated by optimally solving 15 dispatching problems from industry in two ways, once minimising distance, and second time minimising costs, when a mixed private ¯eet and a common carrier are available. The distance minimising dispatches are, on the average, 35% more expensive than the corresponding cost minimising ones, but part of this difference stems from assumptions which are necessary to compare these two criteria. Keywords: distribution; vehicle routing
Introduction Numerous organisations around the world distribute goods by trucks. Very often trucks with different physical, operational and cost characteristics are available to distribute such goods, and the shipper has to decide which shipments to assign to each truck for delivery. Many manufacturers and distributors use regional distribution centers to deliver goods to their customers by a private ¯eet of trucks (which is not necessarily homogeneous) and they usually have the option to use other types of carriers to deliver their shipments, for example dedicated, contract and/or common carriers. Shippers who do not have a private ¯eet usually use a mix of such other carriers. When less-than-truckload (LTL) shipments are assigned to trucks, usually more than one shipment is assigned to each truck, and the truck routing must be determined. The private ¯eet trucks are usually based at the distribution center (where the goods are stored) and return to it upon the completion of their assigned routes. This type of problem is known in the literature as a single source vehicle (or truck) routing problem. But other types of trucks (those of common or contract carriers) may not return to that origin, and are ignored by the vehicle routing problem. A vast body of literature has evolved concerning the vehicle routing problem1,2 but it is almost exclusively concerned with minimising truck miles, hours, or number of trucks used. When the ¯eet is homogeneous these measures tend to minimise the shipping costs. However, when a mixed ¯eet Correspondence: Dr D Ronen, School of Business Administration, University of Missouri-St. Louis, 8001 Natural Bridge Road, St. Louis, Missouri 63121, USA. E-mail: [email protected]
of trucks is used, such measures of effectiveness are not appropriate, and shipping cost is the relevant measure of effectiveness. This is especially true when shipments may be assigned to a common carrier for delivery at a known cost, without being concerned with routing the common carrier's trucks (the common carrier routes his own trucks for delivery of shipments from multiple shippers). We deal here with both, a mixed ¯eet of trucks which may be dispatched and a common carrier who may be assigned L
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