ESTIMATING THE EFFECTS OF CARRIER TRANSIT-TIME PERFORMANCE ON LOGISTICS COST AND SERVICE

Document Type

Journal Article

Publication Date

1998

Subject Area

operations - performance, organisation - performance, mode - bus

Keywords

Shipping, Productivity, Production rate, Optimization, Optimisation, Logistics, Inventory control, Intermodal transportation companies, Carriers, Business logistics

Abstract

Joint determination of an appropriate transportation mode and an optimal inventory control policy is important in supply chain management. The authors present a method of estimating the effects of carrier transit-time performance on logistics cost and service. Unlike current approaches, this method enables users to develop accurate estimates when non-normal shapes characterize the probability distributions of both demand and lead time. Additionally, the methodology includes two important refinements to the standard transportation-inventory model. First, the authors relaxed the assumption that the shipping cost is a linear function of the order quantity. Second, they treated transit time as a segment of lead time. They used the gamma distribution to illustrate the flexibility of the method and developed an enhanced sensitivity-analysis tool for examining the effects of carrier transit time on both cost and service. The methodology is appropriate for the transportation of service-sensitive, independent-demand inventory items controlled by a continuous review inventory system.

Comments

Transportation Research Part A Home Page: http://www.sciencedirect.com/science/journal/09658564

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