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A column generation approach for the route planning problem in fourth party logistics

Author

Listed:
  • Yi Tao

    (Guangdong University of Technology)

  • Ek Peng Chew

    (National University of Singapore)

  • Loo Hay Lee

    (National University of Singapore)

  • Yuran Shi

    (National University of Singapore)

Abstract

In this paper, we address the route planning problem in fourth party logistics (4PL). The problem calls for the selection of the logistics companies by a 4PL provider to optimize the routes of delivering goods through a transportation network. The concept of 4PL emerged in response to the shortfall in services capabilities of traditional third party logistics and has been proven to be capable of integrating logistics resources in order to fulfill complex transportation demands. A mixed-integer programming model is established for the planning problem with setup cost and edge cost discount policies which are commonly seen in practice. We propose a column generation approach combined with graph search heuristic to efficiently solve the problem. The good performance in terms of the solution quality and computational efficiency of our approach is shown through extensive numerical experiments on various scales of test instances. Impacts of cost policies on routing decision are also investigated and managerial insights are drawn.

Suggested Citation

  • Yi Tao & Ek Peng Chew & Loo Hay Lee & Yuran Shi, 2017. "A column generation approach for the route planning problem in fourth party logistics," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(2), pages 165-181, February.
    • Handle: RePEc:pal:jorsoc:v:68:y:2017:i:2:d:10.1057_s41274-016-0024-3
    DOI: 10.1057/s41274-016-0024-3
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    2. Archetti, Claudia & Peirano, Lorenzo & Speranza, M. Grazia, 2022. "Optimization in multimodal freight transportation problems: A Survey," European Journal of Operational Research, Elsevier, vol. 299(1), pages 1-20.

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