Post on 17-Apr-2020
Models for Logistics andTransportation Planning
Teodor Gabriel Crainic
NSERC Industrial Research Chair in Logistics ManagementManagement and Technology, ESG, UQAM
andCentre for Research on Transportation
Montreal, Canadatheo@crt.umontreal.ca
Molde, 2005
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Logistics and Transportation
Central and vital role for the economy and the society in general
The logistics industry ≈700 billion/year (U.S.A.)Logistics costs ≈30% of final sale cost of product (U.S.A.)Transportation activities ≈13% GNP (2000 U.S.A.)(Was at 20% in the 1980s)Similar in West Europe and CanadaHigher in less service-oriented economiesTransportation costs ≈11%-13% of sale cost (CND)
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Logistics and Transportation (2)
No transport = No society as we know itNo logistics = No modern economiesLogistics encompasses transportation activitiesFreight transportation responds to the needs of shippers and, thus, to needs identified during the logistics processesFreight transportation firms face their own challenges and issues regarding planning, management, and control of operations
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Value Chain
Supply / logistics / distribution chainFlows of
Materials and productsInformation (including orders)ServicesMoney
moved by various transportation modes and services, from producers of raw materials, through transformation, fabrication, and assembly facilities, passing through (and waiting in) warehouses, depots, and distribution points, to be delivered to the final user.
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Decisions with Operations Research
Transportation and logistics systemsComplex organizationsMany components, stakeholdersDiverse, often contradictory objectives
Production and service paradigms “Just-in-Time” and GlobalizationCustomer-orientedE-Everything
Need for planning and management methods and tools for systems and operations = Operations Research
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Goals of Course
A general view of freight transportation and logisticsFor a few issues and challenges
The “problem”Modelling itAlgorithmic issues(Some) playExchanges and discussions
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Logistics
First there were the military: Selection, procurement, transportation, maintenance of material (equipment, facilities, …), personnel, and suppliesProcess of planning, implementing, controlling the efficient operation of the value chain to profitably fulfill customer requirements and expectations(modified definition, U.S. Council of Supply Chain Management Professionals)
Deliver the right product to the right place at the right time for the right priceManagement of the details of an operation
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A Simple Production-Distribution System
Production,and storage,one product
Warehouses:Inventories
Customerdemand
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Many Complex Issues
Where to locate plants and warehouses?How large each facility should be?How is each customer served? Direct? From a warehouse? Which one?How much to produce at each period?Level of inventories at plants and warehouses?When to replenish inventories at warehouses?When to ship to each customer?How to ship?….
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Actual Systems Are Even More Complex
Several products, different patterns of demandSeveral types of supplies, different patterns of availabilitySeveral layers of productionraw materials → transformation → assembly of more complex parts → assembly of finished productEach unit may process a subset of supplies and produce some of the products at different yields and costsEach unit with different capacities and costs
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Actual Systems Are Even More Complex (2)
Several layers of distributionplant → regional depot → local warehouse → retail outlet → customerEach unit with different capacities and costsWarehousing facilities may offer assembly facilitiesDistribution may be consolidated and products may be assembled without warehousing (“merge-in-transit”)
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Actual Systems Are Even More Complex (3)
Several customers with specific (known or forecast) requirements in terms of quantity, quality, customization, …Products have to be made up / distributed just-in-timeGlobalization of procurement, production, warehousing, customer baseSpecialized firms offer services – e.g., warehousing and distribution – to permit focusing on core competence
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Actual Systems – Transportation
Proprietary fleetFleet management issues
Using common carriersDedicated (customized, “door-to-door”)“Scheduled” services with consolidation: rail, less-than-truckload, navigation lines, …Multimodal / Intermodal
Outsourcing the whole distribution…
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A Few Major Challenges
The system and its components must be studied, planned, managed, and controlled for optimum performance for the firm and its customersModels and methods must be developed for
The systemComponentsAt all levels of planning and operations management – including “real-time”
Integration of planning and management activitiesIntegration with partners, suppliers, customers: the E-Economy (E-logistics)
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A Few Major Issues
Design of the logistic systemCoordination of procurement, production, warehousing, distributionForecastingProduction planningDistribution managementReal-time responseIntegration …
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A Few Major Issues
Design of the logistic systemCoordination of procurement, production, warehousing, distributionForecastingProduction planningDistribution managementReal-time responseIntegration …
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The Environment
Dominating industrial production paradigmsJust-in-time production and low inventoriesCustomer-driven production
“Pull” rather than “push”CustomizationQuality at “just” (low !!) price
Globalization: production, supply sources, marketsProduction specialization Outsourcing
Increased and fierce global / local competition
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The Environment (2)
Customer expectationsCustomized, on time, reliable serviceLow-cost, high quality product“The company will react as rapidly as I can electronically access its system and communicate my requirements”
Technology (hard and soft)Rapid evolution = Internet, E-business, …Not necessarily easy to comprehend and integrateUneven distribution and penetration
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The Environment (3)
Broader economic spacesProtectionist tendencies The civil society
People have access to the “same” electronic infrastructure and tools: a “civil” watch-dog (opposition)Aspirations towards a “better” world-wide societyGovernments are taking notice (!!)Individuals directly involved in business processes
It does not make planning and management any easier
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The Environment (4)
⇒ More complex production planning and logistics activities
⇒ More automation⇒ Need for more integrated and forward-looking planning⇒ Need for rapid (“real-time”) reaction and adjustment of
plans and schedules⇒ Need for efficient operations⇒ Need for “control” of the logistic chain⇒ More sophisticated analysis and decision support
models, methods, and tools
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A Few Major Enabling Factors
Information Technologies (supply chain management, enterprise resource planning, …)Novel data analysis methodsArtificial Intelligence methods (e.g., knowledge-based inference systems) for unstructured issuesDecision technologies for optimization and simulation of plans and operations = Operations ResearchE-business
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Transportation
Production, Consumptionof Goods and Services
DEMAND
Movements of people, goods, vehicles = TrafficCosts/profits, delays, energy, emissions, …
Economic and legal environment
Physical (Conceptual) Infrastructure and Services
SUPPLY
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Transportation (2)
SupplyInfrastructureTerminalsVehicles and convoysModal and intermodal servicesRoutes, frequencies, schedulesCosts and tariffs
DemandPoint(s) to point(s)Economic and quality criteriaPersonal and contract preferencesPartnershipsLogistic decisionsLaws and regulations
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Transportation Classification
Passenger versus FreightUser/shipper versus CarrierUrban versus Interurban / RegionalModal versus Multi/Inter-modalIntegration?Intelligent Transportation Systems (ITS)
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Passenger Transportation
Customized (door-to-door) servicesPrivate: cars, walking, bicycles, etc.Public: taxi
Consolidation transportationPublic transport: Buses, trains, subways, planes, public taxis, etc.
Intelligent Transportation Systems
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Passenger Transportation Planning
Short planning horizons (hours) Planning dependent upon time-of-day, day-of-week, week-of-year, …Long history, sustained research and development, established practice
Cities and urban areas (sometimes regions)Trend toward multimodality and integration of private and public transportationAim: mobility, accessibility, safety, management of infrastructure and fleets
“Authorities plan, users decide”
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Passenger Transportation Planning (2)
Transit companiesManage the companyDesign the service network
Physical: subway lines, etc.Service: routes, frequencies, schedules
Manage the fleet and services in real-time (ITS)Crew scheduling
Non-uniform demandHuman nature and personnel requests: a “normal” working schedule = Collective agreements
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Freight Transportation
Regional / National PlanningUrban Planning – City LogisticsCarrier Planning
Long haulShort distancesRouting (distribution)
More players and issues than in passenger transportation planning
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National Planning
Integrated planning of a region, country, continent, …Rather recent and limited effortsUntil recently
Freight transportation is a “private” businessModes treated separatelyMacro-economic approaches
Less knowledge and tools compared to passenger transportation
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National Planning (2)
Increased interestScandinavia leads the wayEUThe “others”
Planning horizons and time units are “long” (years, seasons, weeks, days)Several modes, several productsIntermodal terminalsSeveral services on the same infrastructure
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City Freight Planning
City logisticsAim: Decrease the presence of freight vehicles in urban areas (downtown), and their unpleasant consequences, without penalizing the city activities and developmentMeans: Carrier coordination and consolidation of freightVery recent. Almost everything has to be doneBut, several small/medium-sized cities are aggressively moving forward
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Freight Carriers
OwnershipPrivate fleets: Producers who own and operate their own fleets (and infrastructure, eventually)For-hire carriers
Distance and timeLong-haul (intercity): Relatively long distances, few points visited(Local) Distribution: pickup and delivery routes serving several customers, within the day
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Freight Carriers – Service Type
Customized (“door-to-door”)The vehicle (convoy, multimodal service) is dedicated to the demand of one customerFull-truck motor carriers, for-hire ships, …Container, postal, and express courier services: customer perspective
Consolidation transportationThe loads of several customers are grouped, consolidated, into the same shipment and move together on the same vehicle (convoy, …)
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Consolidation Transportation
RailwaysLess-Than-Truckload (LTL) motor carriersShipping linesContainer transportationPostal and express couriers: Service (firm) planning perspectiveRegulatory agencies (in some countries)
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Consolidation Transportation (2)
The same vehicle (convoy) serves the demand of several customersRegular services ⇒Routes, frequencies, schedulesTerminals: Major and central role
Sort freight and consolidate it into vehiclesSort vehicles and group them into convoysMake-up/modify convoys
Many types of services, equipment, and terminalsMany tradeoffs among operations and among performance measures
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Consolidation Transportation (3)
Reduces costs for customersReduces costs for carrier (if correctly planned and performed)Reduces the flexibility for customersAdditional operations and delays (in terminals) ⇒Reduced reliability (and costs)Operation efficiency ⇔ Carrier profitabilityService quality (delays, reliability, …) ⇔ Customer satisfactionNeed for methods to plan and manage operations
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Planning Levels
StrategicLong-termDesigns the system structure (acquisitions)
TacticMedium-termDesigns the service structure (plans)
OperationalTime-dependent Makes happen: dynamic management and control of resources, routes, schedules, ...
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“A Rose by Any Other Name …”
Quantitative methodsManagement ScienceOperations ResearchDecision Technologies
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“A Rose by Any Other Name …”
Quantitative methodsManagement ScienceOperations ResearchDecision Technologies
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Problem solving – Decision Making
Structure the problemIdentify and describe the problemIdentify set of alternatives / strategiesIdentify criteria to measure / evaluate strategies
Problem analysisEvaluate alternativesSelect an (“the best”) alternative
ImplementationImplement the strategy and evaluate impacts
DecisionTechnologies
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Operations Research
Problem representation – the model – and alternative selection – the solution method – through quantitative approachesScientific approach to management and decision making at all levels of planning and operations for the production of goods and servicesTransform information into decisions through models
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Methodology
Implementation
Observation
Problem Definition
Model Building
Resolution and analysesFeed-back Information
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Methodology (2)
Controllable Data(Decision Variables)
Controllable DataControllable Data(Decision Variables)(Decision Variables)
Non Controllable Data(System Description)
Non Controllable DataNon Controllable Data(System Description)(System Description)
ModelModelModel
Solution MethodSolution MethodSolution Method
Output:Numerical results
Decision Variables Values
Output:Output:Numerical resultsNumerical results
Decision Variables ValuesDecision Variables Values
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Methodology (3)
The model is the core of the methodologyRepresentation of the system and decision processLinks the elements assumed known (fixed or not) and the decisions to be taken (i.e., the elements that may be modified by these decisions)Trade-offs among detail, precision, complexity, etc.A mathematical object
Solution methods find numerical values to the elements of the model that represent decisions, and allow manipulations of data and solution for analyses
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Optimization Models and Methods
Static versus Dynamic (Time-dependent)Deterministic versus stochasticContinuous versus Integer / Mixed IntegerLinear versus NonlinearNetwork structure or not
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Solution Approaches
Exact: Identifies the exact solution to the mathematical formulation of the modelHeuristic (approximate): Finds a “good” solution within a “reasonable” time/computing effort
When problem instances are either too large or too difficult or both
SimulationParallel computationSoftware
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OR and IT
Operations Research models and methods are transferred to practice through software and decision support systems (DSS) linked to the firm and the world networks through Information Technologies hardware and software systems
Data exchanges, validation, handlingIntegration issuesData banksModel banksWWW and grid computing…