Outline. IEEM241 Routing and Fleet Management. Course - Objectives. Background. Course summary Essence of decision models Decision models - examples

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1 Outline IEEM241 Routing and Fleet Management Course summary Essence of decision models Decision models - examples Raymond Cheung Spring 2005 Course - Objectives Learn how to model decision problems in routing and fleet management Develop problem solving skills Increase analytical maturity Background IEEM Linear programming Revised simplex method Duality Shadow prices IEEM141 Logistics and Freight Transportation Operations Computer Programming 1

2 What is SCM and Logistics 1970, Quality 1980, lean manufacturing 1990 and beyond, SCM The Increased complexity of supply chain Emergence of global supply chain More demanding customers Shorter production lifecycles Outsourcing, decentralized control and more Feasibilities radical improvement in information technology and communication capabilities Definition of Supply Chain A Network of facilities including Material supply from the suppliers Transformation of materials to finished products Distribution of finished products to the customer As well as information flow and financial flow P&G P &G Product of Detergent Manufacturer Wholesaler Retailer Customer Supplier Plastics Producer Chemical Manufacturer (e.g. Oil Company) Wholesaler Supplier Packaging Firm Paper Manufacturer Supermarket Customer wants detergent and goes To Supermarket Supplier Chemical Manufacturer (e.g. Oil Company) Timber Industry What Is SCM and Logistics SCM (Logistics) is the systematic coordination of activities/processes that procure, produce and deliver products and/or service in a manner that maximizes value to the end customer Our class focuses on how to move the raw material, components, finished products, and returned products between suppliers, manufacturers, distribution centers, and end customers with least cost while satisfying some service level constraints 2

3 Course Objectives Questions For any given demand and supply, how to satisfy the demand with least cost while satisfying the required service level (tactical level) How to design the network to make sure the demand can be satisfied effectively (strategic level) Try to answer these questions by Studying the basic concepts and theory Analyzing the case A bigger goal: a way of thinking Topics Preliminary Modeling and formulation Graph Theory and Linear Programming Fundamentals Network models Minimum spanning trees Shortest path problems Maximum flow problems Minimum cost flow networks Topics Advanced Topics Cargo loading Crew scheduling Network design Vehicle routing Scheduling and routing Dynamic fleet management Readings Main Texts/References Evans, J. and Minieka, E., Optimization Algorithms for Networks and Graphs, Dekker, Ahuja, R., Magnanti, T. and Orlin, J., Network flows: theory, algorithms, and applications. Prentice Hall, 1993 Articles Lecture notes 3

4 Air-cargo, Ocean, Rail Terminals Consulting Firms: Sabre, A T Kearney BalTRANS, MSAS, LEP Carriers e.g. Airlines, Rail, Ocean liners HACTL AAT Application Areas Cathay Pacific Forwarders Dragon Airline HIT Air-cargo, Ocean, MTL Rail KCRC CSX Terminals etc OOCL Kerry, Sun Hing, Sagawa Logistics Service Companies, e.g. Express, Trucking, thirdparty logistics Warehouse Operators CFS Operators DHL, UPS, SpeedPost FedEx, TNT Manufacturers Divisions of Logistics Transportation Operations Planning Warehousing Philips, Motorola, JOS (Jardine) Areas versus Knowledge Deterministic OR Stochastic OR Information Systems Network Analysis Human Performance Software Engineering Land Ocean Air Terminal Yard Warehouse IEEM141 IEEM245 IEEM310 IEEM365 IEEM341 CIVL261 IEEM313 IEEM320 Relations to other courses Operations at Service & management at Planning at Human interactions at Coordination between Human flow between Simulating activities at Layout and material handling at Facilities (suppliers, manufacturers, warehouses customers) Grading Approximate distribution: 40% - Problem sets» Individual assignments» Group assignments» Short case reports» Computer assignments In-class exercise (short) 25% - Test 35% -Final IEEM241 Managing goods flow between 4

5 What is Logistics? One school of thoughts: Manufacturing logistics Shipper logistics Carrier logistics Third-party logistics Another school of thoughts: Organized moves of goods, people, information, money French word logis: Movement and billeting of troops Greek word logistikon: The science of computing Shortest Path Shortest path: Ship a unit product from node a to node m over a network Two kinds of methods to find the shortest path Linear programming and algorithms What is the relationship with them? Algorithm usually is faster, however, originally usually we need to get some idea from the linear programming in order for us to develop good algorithms In this course, we focus on the algorithms! Hard routing problems Some routing and fleet management problems are Easy to state Hard to solve (in terms of solution time) Not hard to get a pretty good solution: experience: this is the foundation for the VRP In this course, we focus on learning how to get reasonable good solutions! Essence of Decision models Modeling Why modeling? Quantitative decision making What is optimization? What are the basic elements and tools? 5

6 Making a decision Making a decision Fleet management Available truck: 20 hours 19 hours 3 hours Possible customer demand 96 hours 96 hours Demand for red or red/green sweater 21 hours 4 hours Possible customer demand 96 hourss Demand for green or red/green sweater Modeling Optimization Models The two decision problems are in different context but with the same structure Optimization is the process of translating a real problem into mathematics, which in turn is implemented on computer. Need standard, precise representations that we can use computer to perform optimization and scientific analysis. min F(x) Ax = b x 0 6

7 Basic elements Anatomy of an optimization model min cx Ax = b Objective function, such as costs, profits, service. Constraints, such as one driver cannot be in two places at the same time. Resources in optimization Definition: A controllable object that constrains the system. Examples x 0 Decision variable, such as moving loaded or empty. Optimization model gives us vocabulary for expressing optimization problems. Distribution of Chemical Products Resources involved: Distribution of Chemical Products Process: 1. Getting the vehicle filled and ready C R ={ D R T P C Driver Tractor Trailer Product Customer { 7

8 Distribution of Chemical Products Process: 2. Deliver products and manage the inventory of customer tanks Examples Lancaster Lancaster What a truck can do depends on the driver, tractor, trailer and the amount of product in the trailer. Assigning berth space to vessels Decisions: Vehicle pick up and delivery Decisions: Objectives: Considerations: Depot Objectives: Considerations: 8

9 Dolly and tractors management Decisions: Example: Drayage problem Take the box to a warehouse Objectives: Considerations: To a depot for getting an empty container Load the box and go to a container terminal Example: Drayage problem Truckload Management Loading goods on truck A Task : movement There is an assignment cost to assign a resource to a task. Empty Re-positioning A Resource : Tractor, driver 9

10 Air Mobility Command Air Mobility Command Midair refueling Cargo Holding Fuel Maintenance Air Mobility Command Ramp Space Cargo Handling Routing decisions The US attacked on Iraq Operation Dessert Shield 23 days delivery time for equipment big inventory for some material shortage for some other material Looking at the Federal Express Model Operation Dessert Storm 5.6 day delivery time more reliable supply chain 10