Simultaneous determination of multiproduct batch and full truckload shipment schedules

A fundamental premise of the well-known economic lot-scheduling problem (ELSP) is that the finished products are consumed at continuous rates, i.e. their respective cycle inventories are depleted on the basis of unit transactions. In today's supply chains, however, employing complex distribution networks, finished goods inventories from manufacturing plants are usually shipped in bulk to succeeding stages along the distribution process. Moreover, existing transport economies often tend to favor full truckload (TL), rather that partial or less than truckload (LTL) shipments, for economical movement of such goods. The scenario examined here, however, involves a set of products, for which individual TL shipments are uneconomical. As a remedy, we construct a model for taking advantage of TL rates by combining LTL quantities of the items into a full load. We adopt the common cycle approach for the ELSP, in conjunction with a common replenishment cycle, as a coordination mechanism that is simple to analyze and implement. This is integrated with a periodic full truckload shipping schedule. Such effective coordination of production and shipment schedules is likely to result in a more streamlined supply chain. The concepts developed are illustrated through a simple numerical example.