Planning and consolidating shipments from a warehouse
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Planning and consolidating shipments from a warehouse JG Klincewicz and MB Rosenwein AT&T Labs, Holmdel, USA A typical warehouse or distribution centre ships material to various customer locations across the country, using various modes of transportation. Each mode has different constraints on size of shipment, different cost structures and different transportation times. Typically, for a given warehouse there are certain customer locations that receive frequent shipments of material. It is often possible, therefore, for the warehouse to consolidate different orders for the same customer location into a single shipment. The transportation mode and the day of shipment must be chosen such that the consolidated shipment meets the size constraints and arrives within an agreed-upon `delivery window'. In preparing a warehouse distribution plan, a planner seeks to achieve transportation economies of scale (by consolidating two or more orders into fewer shipments) while levelling the workload on warehouse resources and ensuring that material arrives at a customer location during the acceptable delivery window. The problem of deciding what shipments to make daily can be formulated as a set partitioning problem with side constraints. This paper describes a heuristic solution approach for this problem. Computational experiments using actual warehouse select activity indicate that, for moderate-size problems, the heuristic produces solutions with transportation costs that are within a few percent of optimal. Larger problems found in practice are generally too large to be solved by optimal algorithms; the heuristic easily handles such problems. The heuristic has been integrated into the transportation planning system of a leading distributor of telecommunications products. Keywords: distribution; heuristics; transport
Introduction Every day, a typical warehouse, or distribution centre, ships material to various customer locations across the country, using various modes of transportation, such as air freight, economy air freight, parcel, `less-than-truckload' (LTL) truck shipments, and `full truckload' (TL) shipments. Each mode has different limits on the maximum weight of a shipment, different cost structures, and different transportation times. In choosing a transportation mode for a particular shipment, therefore, a distributor must take into account the size of the shipment, feasible arrival dates at the customer, and cost. Material is shipped to ful®ll customer orders. Each customer order has a `delivery window' associated with it, that is, an earliest date and latest date for its arrival at the customer location. Each order likewise, consists of one or more `line items'. A `line item' is a particular stock item that appears in a customer order. (For example, if a customer requests three widgets and four gadgets in a single order, there are two `line items' in the order: widgets and gadgets). Generally speaking, there is a limit on the total n
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