Page 311 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes Transportation Analysis Data Requirements

Transportation analysis requires three types of data network, pickup or delivery demand, and
operating characteristics. The network defines all possible routes and is the backbone of any
transportation system analysis. In some cases, a network is defined using street maps of the
delivery area. Each intersection is a node, and the streets become links. The network contains the
links between each node, the road distance, the transit time, and any special constraints such as
weight limits or tolls. A Street-level network is very accurate and precise, particularly when
there are constraints such as rivers and mountains. The deficiency of a street-level network is the
high cost of development and maintenance. The other approach involves plotting customers on
a grid and then computing the possible links between customers using the straight line distance.
Latitude and longitude coordinates are often used. While a grid system is less costly to develop
and maintain than a street-level network, it is less accurate and does not consider constraints as
well.
Demand data defines periodic customer pickup and delivery requirements. For strategic or
long-term analysis, demand is specified in terms of average periodic pick-ups or deliveries per
customer. Routes are then created based on the average demand with a capacity allowance for
extremely high demand periods. For tactical routing analysis, demand typically represents
customer orders scheduled for delivery during the period being planned, such as daily. Tactical
analysis allows the routes to be precisely designed for delivery requirements with no allowance
for uncertainty.

Operating characteristics define the number of vehicles, vehicle limitations, driver constraints,
and operating costs. Vehicle limitations include capacity and weight restrictions as well as
unloading constraints such as dock requirements. Driver constraints include driving time and
unloading restrictions. Operating costs include fixed and variable expenses associated with
vehicles and drivers.
Transportation analysis for vehicle routing and scheduling is receiving increased interest because
of the effectiveness and availability of low-cost software. Many firms involved in day-to-day
transportation operations have reduced transportation expenses by 10 to 15 percent through the
use of tactical or strategic transportation analysis. As customers continue to demand smaller
orders, transportation analysis will become increasingly important to make effective routing,
scheduling, and consolidation decisions.

Task At what point in the typical analysis does the technique give way to the managerial
review and evaluation process?

Self Assessment

State whether the following statements are true or false:
9. Dynamic simulation is used to investigate the dynamics of multiple-stage inventories.
10. Plant and distribution centre location is a common problem faced by logistics managers.
11. Mathematical programming methods, which are classified as optimization techniques,
are one of the most widely used strategic and tactical logistics planning tools.
12. The traditional disadvantages of network optimization have been the cost of the problem
that can be solved and the inclusion of fixed cost components.

306 LOVELY PROFESSIONAL UNIVERSITY