Professional Documents
Culture Documents
Dr M MATHIRAJAN
Department of Management Studies
Indian Institute of Science
Bangalore
Components of
logistics management :
Management actions
Planning
Implementation
Outputs of
logistics
Control
Natural resources
(land, facilities,
and equipments)
Human resources
Financial resources
Information
resources
Logistics management
Suppliers
Raw
In-process
materials inventory
Finished
goods
Customers
Logistics Activities
Customer Service
Demand forecasting
Distribution
communications
Inventory control
Material handling
Order Processing
Parts and service
support
Marketing
orientation
(competitive
advantage)
Time and
place utility
Efficient
movement to
customer
Proprietary
asset
Production
Storage
Transportation
The term Resource applies to all of the
factors of production, including
materials (e.g., Iron, fabric, parts),
equipment (e.g., machines or vehicles),
energy (e.g., oil, coal, electricity) and
labor.
Demand uncertainty?
Labor costs?
(d) When should a firm use two or more sources for a part?
Product
Design
Decisions
Measurement
Decisions
Reward
Decisions
Process
Design
Decisions
Product
Decisions
Price
Decisions
Engineering
Systems
Promotion
Decisions
Place (How,
where, how
much)
Logistics
Systems
Inventory
Decisions
Production
Capacity
Decisions
Transportation
Decisions
Production
Scheduling
Decisions
Sourcing
Decisions
Shop Floor
Decisions
Marketing
Systems
Manufacturing
Systems
Inventories
finished goods policies
supply scheduling
short term forecasting
Warehousing
private vs. public
space determination
warehouse configuration
Stock layout and dock design
stock placement
Cross-docking
Facility Location
determining location, number
and size of facilities
allocating demand to facilities
Customer Service
determining customer wants
determining customer response
to service changes
Materials Handling
equipment selection
equipment replacement
order picking procedures
Packaging design
Order Processing
order procedure determination
Production Scheduling
aggregate production quantities
sequencing and timing of
production runs
Logistics Planning
Decide what, when, how in three levels:
Strategic long range > 1 year
Tactical - < 1 year horizon
Operational frequently on hourly or daily basis
Examples of Decisions
Type
Strategic
Tactical
Operational
Location
#Facilities, size,
location
Inventory
positioning
Routing
Transportation
Mode
Seasonal Service
Mix
Replenishment Qty
and timing
Order Processing
(CS)
Selecting order
entry system
Expediting orders
Strategy/Control
system?
How much?
Where?
Which mode?
Which carrier?
Which route?
Shipment size and
frequency?
Where?, How
many? What size?
Allocation?
Transport Fundamentals
Most important component of logistics cost.
Usually 1/3 - 2/3 of total cost.
Transport involves
equipment (trucks, planes, trains, boats, pipeline),
people (drivers, loaders & un-loaders), and
decisions (routing, timing, quantities, equipment size,
transport mode).
When deciding the transport mode for a given product
there are several things to consider:
Mode price
Transit time and variability (reliability)
Potential for loss or damage.
NOTE: In developing countries we often find it necessary to
locate production close to both markets and resources,
while in countries with developed distribution systems people
can live in places far from production and resources.
let us guess
Routes of Goods
Air
terminal
air
Goods at
shippers
sea
Freight
forwarder
warehouse
Container
terminal
vessel
bulk goods
sea
pier
mid-stream
barge
land
land
plane
railway
truck
May
change
transportation
modes
Freight
forwarder
warehouse
Goods at
consignees
Vehicle Routing:
- Separate single origin and destination:
Once we have selected a transport mode and have
goods that need to go from point A to point B, we
must decide how to route a vehicle (or vehicles)
from point A to point B.
Given a map of all of our route choices between A and
B we can create a network representing these
choices The problem then reduces to the problem of
finding the shortest path in the network from point
A to B.
This is a well solved problem that can use Dijkstras
Algorithm for quick solution of small to medium
(several thousand nodes) sized problems.
Vehicle Routing:
- Multiple Origin and Destination Points
Suppose we have multiple sources and multiple
destinations, that each destination requires some integer
number of truckloads, and that none of the sources have
capacity restrictions [No Capacity Restriction].
Destinations
Vehicle Routing:
- Coincident Origin and Destination: The TSP
If a vehicle must deliver to more than two customers, we
must decide the order in which we will visit those customers
so as to minimize the total cost of making the delivery.
We first suppose that any time that we make a delivery to
customers we are able to make use of only a single vehicle,
i.e., that vehicle capacity of our only truck is never an issue.
In this case, we need to dispatch a single vehicle from our
depot to n - 1 customers, with the vehicle returning to the
depot following its final delivery.
This is the well-known Traveling Salesman Problem (TSP).
The TSP has been well studied and solved for problem
instances involving thousands of nodes. We can formulate the
TSP as follows:
TSP Formulation
Minimize
c x
ij ij
i I j J
ij
i I
1, j J
ij
( i , j ) E (U )
U 1, U N
xij {0,1}, i I , j J
Illustration of VRP
123
44
50
29
112
58
90
76
88
Depot
77
57
59
39
176
89
65
124
115
98
(Outlier)
125
Vehicle Routing
Find best vehicle route(s) to serve a set of orders
from customers.
Best route may be
minimum cost,
minimum distance, or
minimum travel time.
Orders may be
Delivery from depot to customer.
Pickup at customer and return to depot.
Pickup at one place and deliver to another
place.
Complications
Pure Pickup or Delivery Problems.
Mixed Pickups and Deliveries.
Pickup-Delivery Problems.
Backhauls
Many Costs:
Fixed charge.
Variable costs per loaded mile & per empty mile.
Waiting time; Layover time.
Cost per stop (handling).
Loading and unloading cost.
More Complications
Time windows for pickup and delivery.
Hard vs. soft
Compatibility
Vehicles and customers.
Vehicles and orders.
Order types.
Drivers and vehicles.
Driver rules (DOT)
Max drive duration = 10 hrs. before 8 hr. break.
Max work duration = 15 hrs. before 8 hr break.
Max trip duration = 144 hrs.
Simple Models
Homogeneous vehicles.
One capacity (weight or volume).
Minimize distance.
No time windows or one time window per
customer.
No compatibility constraints.
No DOT rules.
VRP Solutions
Heuristics
Construction: build a feasible route.
Improvement: improve a feasible route.
Not necessarily optimal, but fast.
Performance depends on problem.
Worst case performance may be very poor.
Exact algorithms
Integer programming.
Branch and bound.
Optimal, but usually slow and applicable for small size
problem
Difficult to include complications.
APPLICATIONS OF VRP
The VRP is applicable in many practical situations directly related to
the physical delivery of goods such as
distribution of petroleum products,
distribution of industrial gases,
newspaper deliveries,
delivery of goods to retail store,
garbage collection and disposal,
package pick-up and delivery,
routing of salesmen,
reading of electric meters,
preventive maintenance inspection tours,
employee pick-up and drop-off , etc.
In COVERS
Efficient
Heuristic Procedures
NNH
MNNH
MSCWH
Simulation Features
Manipulate the System Generated Routes
Completely User Generated Routes
COVERS Handles
Multi-Depot VRP
Heterogeneous VRP
Minimizing the total distance traveled by the vehicles and/or the number of vehicles
used.
UNDER THE CONSTRAINTS THAT
ASSUMPTIONS
Tot
Quantities
(Units)
# Variables
Including (0, 1)
Variables
# (0, 1)
Variables
#
Constraints
Optimal
Distance
(Km.)
# Routes
# Iterations
(LINDO)
CPU Time
(AT 486)
61
48
16
60
13.2
45
71
75
25
85
26.4
330
79
108
36
114
28.6
353
106
147
49
147
31.0
2780
23
117
192
64
187
31.0
70724
80
132
243
81
225
37.4
43021
667
(11 Mts)
10
137
300
100
270
47.8
4963340
100800
(28 Hrs.)
Sutcliffe and Board (1990) estimated that a simple extrapolation of Waters (1988) ILP approach using
the SCICONIC software might take nearly 1,20,000 years of CPU time on a VAX 8600 machine to solve a
VRP with 38 pick-up points!
Optimal
Solution of VRP: Transporting Mentally Handicapped Adults to an Adult Training Center. JORS, 41(1), 61-67.
HEURISTIC ALGORITHMS
(NIH)
(CIH)
(PCWH)
(SCWH)
(CHH)
(NHH)
Modified NNH
(MNNH)
Modified SCWH 1
(MSCWH-1)
Modified SCWH 2
(MSCWH-2)
Timings
#
Commuters
# Pickup
Points
#
Routes
Total Distance
per Trip (Km.)
Seat
Utilization (%)
06.15 02.15 PM
3659
303
64
1977.0
89.0
FG
07.30 04.15 PM
3999
313
66
2163.0
94.3
AG
08.45 05.30 PM
3042
286
53
1808.3
90.0
02.15 10.15 PM
975
242
30
1056.7
54.0
10.15 06.15 AM
40
----
----
----
----
11715
410
213+
(426)
7005.0
(14010)
----
Total
Each Bus Route (Trip) Repeated; Two Trips a day, Once for Pick-up and once for Drop-off.
Shift 1
A
Shift 2
FG
Shift 3
AG
Shift 4
B
Total Distance
(Km.)
Savings
(in %)
CPU Time
PC/AT 486
@ 33 MHz
(Minutes)
----
Existing
Practice
(Manual)
1977.0
2163.0
1808.3
1056.7
7005.0
-----
NIH
1875.8
2047.7
1734.1
890.3
6547.9
6.5
12
CIH
2155.2
2322.3
1914.2
1020.7
7412.4
- 5.8
52
PCWH
1803.5
2026.1
1761.1
1080.9
6671.6
4.76
19
SCWH
2139.2
2306.6
1889.2
1014.5
7349.5
- 4.9
18
CHH
1903.8
2047.7
1749.2
964.7
6665.4
4.85
55
NNH
1822.9
2063.2
1708.0
900.0
6494.1
7.29
MNNH
1817.7
2040.8
1740.7
858.9
6458.1
7.81
MSCWH-1
1796.2
2066.4
1687.5
910.2
6460.3
7.78
MSCWH-2
1799.4
2047.0
1688.5
908.5
6443.4
8.02
Shift 1
A
Shift 2
FG
Shift 3
AG
Shift 4
B
Total Routes
Reduction in
Trips (%)
Existing
Practice
(Manual)
64
66
53
30
213
NIH
60
63
51
23
197
7.51
CIH
65
69
52
27
213
PCWH
63
68
56
36
223
- 4.7
SCWH
65
70
55
28
218
- 2.3
CHH
60
62
51
25
198
7.04
NNH
57
64
50
24
195
8.45
MNNH
57
63
51
23
194
8.92
MSCWH-1
58
63
49
24
195
8.45
MSCWH-2
58
63
49
24
194
8.92
-----
(NHH)
Modified NNH
(MNNH)
Modified SCWH-2
(MSCWH-2)
CONTROL MODULE
COMPUTER SYSTEM
USER