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An Algorithm for the Multiattribute, Multicommodity Flow Problem with Freight Consolidation and Inventory Costs

Author

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  • Douglas A. Popken

    (University of Dayton, Dayton, Ohio)

Abstract

To remain competitive, manufacturers must seek transportation strategies that both reduce costs and maintain high levels of service. One approach is to consolidate inbound freight at transshipment points. This provides economies of scale and promotes capacity efficient mixes of high and low density items. When service level considerations are included via inventory holding costs, the approach yields a nonlinear network model with multiattribute multicommodity flows. The model is difficult to solve for global optimality in that the objective function is neither convex nor concave; therefore, a composite algorithm is proposed. The algorithm alternates between a linearization technique to find local optima and a heuristic search based on “adjacent concave flows” to provide local improvements. Computational results demonstrate the ability of the multiattribute approach to identify savings in overall transportation and inventory costs when compared to a single attribute approach.

Suggested Citation

  • Douglas A. Popken, 1994. "An Algorithm for the Multiattribute, Multicommodity Flow Problem with Freight Consolidation and Inventory Costs," Operations Research, INFORMS, vol. 42(2), pages 274-286, April.
    • Handle: RePEc:inm:oropre:v:42:y:1994:i:2:p:274-286
    DOI: 10.1287/opre.42.2.274
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    Cited by:

    1. Sila Çetinkaya & Chung-Yee Lee, 2000. "Stock Replenishment and Shipment Scheduling for Vendor-Managed Inventory Systems," Management Science, INFORMS, vol. 46(2), pages 217-232, February.
    2. Wong, Wai Hung & Leung, Lawrence C. & Hui, Yer Van, 2009. "Airfreight forwarder shipment planning: A mixed 0-1 model and managerial issues in the integration and consolidation of shipments," European Journal of Operational Research, Elsevier, vol. 193(1), pages 86-97, February.
    3. Popken, Douglas A., 1996. "An analytical framework for routing multiattribute multicommodity freight," Transportation Research Part B: Methodological, Elsevier, vol. 30(2), pages 133-145, April.
    4. Oded Berman & Qian Wang, 2006. "Inbound Logistic Planning: Minimizing Transportation and Inventory Cost," Transportation Science, INFORMS, vol. 40(3), pages 287-299, August.
    5. Qin, Hu & Zhang, Zizhen & Qi, Zhuxuan & Lim, Andrew, 2014. "The freight consolidation and containerization problem," European Journal of Operational Research, Elsevier, vol. 234(1), pages 37-48.
    6. Keng Hoo Chuah & Jon C. Yingling, 2005. "Routing for a Just-in-Time Supply Pickup and Delivery System," Transportation Science, INFORMS, vol. 39(3), pages 328-339, August.
    7. Hui, Yer Van & Gao, Jia & Leung, Lawrence & Wallace, Stein, 2014. "Airfreight forwarder’s shipment planning under uncertainty: A two-stage stochastic programming approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 66(C), pages 83-102.
    8. Lawrence C. Leung & Yer Van Hui & Yong Wang & Gang Chen, 2009. "A 0--1 LP Model for the Integration and Consolidation of Air Cargo Shipments," Operations Research, INFORMS, vol. 57(2), pages 402-412, April.
    9. Patil, Rahul & Avittathur, Balram & Shah, Janat, 2010. "Supply chain strategies based on recourse model for very short life cycle products," International Journal of Production Economics, Elsevier, vol. 128(1), pages 3-10, November.
    10. Chitsaz, Masoud & Cordeau, Jean-François & Jans, Raf, 2020. "A branch-and-cut algorithm for an assembly routing problem," European Journal of Operational Research, Elsevier, vol. 282(3), pages 896-910.
    11. Chung-Yee Lee & Sila Çetinkaya & Wikrom Jaruphongsa, 2003. "A Dynamic Model for Inventory Lot Sizing and Outbound Shipment Scheduling at a Third-Party Warehouse," Operations Research, INFORMS, vol. 51(5), pages 735-747, October.
    12. Keely L. Croxton & Bernard Gendron & Thomas L. Magnanti, 2003. "Models and Methods for Merge-in-Transit Operations," Transportation Science, INFORMS, vol. 37(1), pages 1-22, February.
    13. Baita, Flavio & Ukovich, Walter & Pesenti, Raffaele & Favaretto, Daniela, 1998. "Dynamic routing-and-inventory problems: a review," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(8), pages 585-598, November.
    14. Hossein Abouee-Mehrizi & Oded Berman & M. Reza Baharnemati, 2014. "Designing Production-Inventory-Transportation Systems with Capacitated Cross-Docks," Transportation Science, INFORMS, vol. 48(1), pages 121-135, February.
    15. Sıla Çetinkaya & Chung‐Yee Lee, 2002. "Optimal outbound dispatch policies: Modeling inventory and cargo capacity," Naval Research Logistics (NRL), John Wiley & Sons, vol. 49(6), pages 531-556, September.
    16. Luminiţa Nicolescu & Cristina Galalae & Alexandru Voicu, 2013. "Solving a Supply Chain Management Problem to Near Optimality Using Ant Colony Optimization, in an International Context," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 15(33), pages 8-26, February.
    17. Haiqing Song & Vernon N. Hsu & Raymond K. Cheung, 2008. "Distribution Coordination Between Suppliers and Customers with a Consolidation Center," Operations Research, INFORMS, vol. 56(5), pages 1264-1277, October.
    18. Hanbazazah, Abdulkader S. & Abril, Luis & Erkoc, Murat & Shaikh, Nazrul, 2019. "Freight consolidation with divisible shipments, delivery time windows, and piecewise transportation costs," European Journal of Operational Research, Elsevier, vol. 276(1), pages 187-201.
    19. Christine Nguyen & Alejandro Toriello & Maged Dessouky & James E. Moore, 2013. "Evaluation of Transportation Practices in the California Cut Flower Industry," Interfaces, INFORMS, vol. 43(2), pages 182-193, April.
    20. Masoud Chitsaz & Jean-François Cordeau & Raf Jans, 2019. "A Unified Decomposition Matheuristic for Assembly, Production, and Inventory Routing," INFORMS Journal on Computing, INFORMS, vol. 31(1), pages 134-152, February.

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