Can we improve the freight network solutions of a large retailer by using probability distributions to model demand?

The scope of the present thesis was to investigate whether we can improve the quality of our solutions for a retailer's transportation network by employing probability distributions to model freight demand. The quality of the solutions was assessed in the basis of transportation cost and service level. The research work was based on a large scale LP optimization tool, called Stochastic Flow Analyzer. SFA attempts to match transportation capacity to demand by optimally assigning the network flows to either the private fleet or to for-hire carriers. Using SFA we designed a set of annual plans for the retailer's network. Each plan assigned a number of drivers at each of the domiciles. In order to evaluate the performance of each plan we simulated the demand for 26 weeks. We showed that there is a trade-off between transportation cost and service level. Stochastic solutions were performing better in terms of cost but in the same time deterministic solutions were achieving higher service levels. We concluded that the best probabilistic solution was the one where we used the empirical distribution function to model lane demand. However, the deterministic solution with refined fixed volumes offered 5% higher service level, it is easier to implement in real life operations and the increase in transportation cost was less than 4%.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Civil and Environmental Engineering.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2009

Author dc:creator

• Iliadis, Christodoulos

Advisor dc:contributor.advisor

• Christopher G. Caplice.

• Civil and Environmental Engineering.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/51626

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/51626