Dynamic Hybrid Cross-Docking Model with Multiple Truck Types

Abstract

In today's business environment, companies are forced to improve their logistics activities due to high competition. Therefore, improving the design and operations of distribution networks plays a very important role in efficiently managing supply chains. Usually, companies operate traditional distribution networks, which may not be economical for complex networks. Research and practice have been very inquisitive to find better ways to transport goods across locations. One way to improve distribution in such networks is through the use of cross-docks, which are intermediate facilities used to consolidate shipments. This research addressed the problem of optimizing the flow of goods between multiple supplier and multiple retailer terminals by taking complete advantage of the concept of hybrid cross-docking facilities. The objective of the developed model is to determine the best fleet dispatching and consolidation plans between the terminals using multiple truck types over a finite planning horizon. The objective function includes quantity dependent transportation cost components. The model is formulated as a mixed integer linear program and minimizes the total costs of transportation, throughput and inventory holding costs over the entire planning horizon. Sensitivity analysis is performed to assess the effect of varying the problem's parameters on the model's outputs. The results show that as the demand increases, there are more direct shipments using full truckload (TL) pickups, in order to ensure that the warehouse doesn't store bulky products. For large values of inventory holding costs and demand values, there seems to be little or no inventory of high volumetric weight products left at the warehouse. Most of the indirect shipments from cross-docks to retailers were for low volume products using TL trailers. Amongst all input parameters analyzed, changes in demand had the greatest effect on increasing leasing costs. However, changes in inventory holding costs were found to have a significant effect on decreasing the processing costs. Therefore, decision makers have to consider all the studied changes in parameters at the same time, in order to minimize the total system cost.