Transportation Analysis Techniques
Routing and scheduling analyses have been well researched for supply chain tactical and operational planning. They are particularly important for firms completing partial load delivery activities such as package or beverage distribution. The techniques can generally be classified as heuristic approaches, exact approaches, interactive approaches, and combination approaches.
Heuristic approaches utilize rule-of-thumb clustering or savings techniques to develop routes by sequentially adding and deleting stops. Exact, or optimal, approaches use mathematical (linear) programming to identify the best routes. Historically, optimization solution methods have been too computationally complex for even the fastest computers, but recent mathematical programming advances have enhanced their capabilities. The main difficulties with most exact procedures are (1) the large number of constraints and variables needed to represent even the basic routing and scheduling problem and (2) the impact of this size on computation time and computer storage space.
Interactive approaches utilize a combination of simulation, cost calculator, or graphics capability to support an interactive decision process. The decision maker identifies the alternatives for evaluation. The interactive decision support system then determines and plots the routes and calculates the performance characteristics in terms of time and cost. The decision maker then interactively evaluates the performance characteristics of each alternative and refines the strategy until no additional improvement is likely. The obvious drawback of interactive approaches is the dependence on the skill and ability of the decision maker, particularly as the problem size and complexity increase.
Combinations of the three approaches have proved very effective. Two criteria are important in evaluating alternative solution approaches: generalizability and accuracy. Generalizability is the ability to efficiently incorporate extensions for special situations, such as pickups and deliveries, multiple depots, time windows, vehicle capacities, and legal driving times, in an actual setting. Accuracy refers to the ability to closely approximate performance characteristics and the results’ proximity to an optimal solution. Accuracy determines the level of and credibility in the possible savings as a result of decreased vehicle operating expense, better customer service, and improved fleet productivity.
Transportation Analysis Data Requirements
Transportation analysis requires three types of data: network, pickup or delivery demand, and operating characteristics. The network defines all possible routes and is the backbone of any transportation routing system. In some cases, a network is defined by using street maps of the delivery area. Each intersection is a node, and the streets become links. The network contains the links between each node, the road distance, the transit time, and any special constraints such as weight limits or tolls. A street-level network is very accurate and precise, particularly when there are constraints such as rivers and mountains. The deficiency of a street-level network is the high cost of development and maintenance. The other approach involves plotting customers on a grid and then computing the possible links between customers, using straight-line distance. Latitude and longitude coordinates are often used. While a grid system is less costly to develop and maintain than a street-level network, it is less accurate and does not consider constraints as well. The use of global positioning satellites (GPS) has facilitated determination of network locations and possible routes. GPS is also useful to provide delivery drivers with directions.
Demand data defines periodic customer pickup and delivery requirements. For strategic or long-term analyses, demand is specified in terms of average periodic pickups or deliveries per customer. Routes are then created on the basis of the average demand with a capacity allowance for extremely high-demand periods. For tactical routing analysis, demand typically represents customer orders scheduled for delivery during the period being planned, such as daily. Tactical analysis allows the routes to be precisely designed for delivery requirements with no allowance for uncertainty.
Operating characteristics define the number of vehicles, vehicle limitations, driver constraints, and operating costs. Vehicle limitations include capacity and weight restrictions as well as unloading constraints such as dock requirements. Driver constraints include driving time and unloading restrictions. Operating costs include fixed and variable expenses associated with vehicles and drivers.
Transportation analysis for vehicle routing and scheduling is receiving increased interest because of the effectiveness and availability of low-cost software and increasing fuel prices. Many firms involved in day-to-day transportation operations have reduced transportation expenses by 10 to 15 percent through the use of tactical or strategic transportation analysis. As customers continue to demand smaller orders, transportation analysis will become increasingly important to make effective routing, scheduling, and consolidation decisions.