1. Transportation General Concepts Lecture 15 ESD.260 Fall 2003 Caplice

2. MIT Center for Transportation & Logistics - ESD.2602 Transportation Operations Consolidated operations (CO) Bus/rail transit LTL Rail Airlines Ocean carriers/liner service Package delivery Direct operations (DO) Taxi TL Unit trains Charter/private planes Tramp services Courier DO conveyances on CO carriers (sub-consolidation) Rail cars Ocean containers Air “ igloos ”

3. MIT Center for Transportation & Logistics - ESD.2603 Core Transportation Activities

4. MIT Center for Transportation & Logistics - ESD.2604 Types of Transportation Systems Based on Consolidation Used w/o TranshipmentPoint One to One One to Many Many to One Many to Many With TranshipmentPoint One to Many Many to One Many to Many Other Issues Dynamic TranshipmentPoints Interleavenedtrips Planning versus Execution

5. MIT Center for Transportation & Logistics - ESD.2605 Solutions Approach Math Programming Approach Develop detailed objective function and constraints Requires substantial data Solve MILP to optimality Simulation Approach Develop detailed rules and relationships Simulate the expected demand patterns Observe results and rank different scenarios Continuous Approximation Approach Develop a Logistics Cost Function (LCF) that incorporates the relevant decision variables Obtain reasonable results with as little information as possiblein order to gain insights Detailed data can actually make the optimization process harder

6. MIT Center for Transportation & Logistics - ESD.2606 Time Space Diagram

7. MIT Center for Transportation & Logistics - ESD.2607 Cumulative Count Curve

8. MIT Center for Transportation & Logistics - ESD.2608 Logistics Cost Function Nomenclature D = Annual demand (items/time) C r = Rent cost ($/item-time) C i = Inventory cost ($/item-time) C f = Fixed transport cost ($/shipment) C v = Variable transport cost (#/item) H MAX = Maximum headway (time) V = Shipment size (items) V = Total number of units shipped=Σv v MAX = Maximum capacity for transport mode (items) C s = Fixed cost per stop ($/stop) C d = Cost per distance ($/distance) C vd = Marginal cost per item per distance C vs = Marginal cost per item per stop N s = Number of deliverystops C vh = Variable handling costs ($/item) C fh = Fixed handling costs ($/pallet) v hMAX = Maximum capacity for pallet or box (items)

9. MIT Center for Transportation & Logistics - ESD.2609 Holding Costs = R + I

10. MIT Center for Transportation & Logistics - ESD.26010 Move Costs = T + H

11. MIT Center for Transportation & Logistics - ESD.26011 Transport Costs

12. MIT Center for Transportation & Logistics - ESD.26012 Transport Costs Relation to Capacity f t (V) is sub-additive: f t (V 1 +V 2 )≤ f t (V 1 )+f t (V 2 ) C v V MAX <<C f

13. MIT Center for Transportation & Logistics - ESD.26013 Transport Costs Multiple Modes

14. MIT Center for Transportation & Logistics - ESD.26014 Handling Costs

15. MIT Center for Transportation & Logistics - ESD.26015 Total Logistics Cost Function