milliken lagrange isye 6203 project “evaluation of consolidation strategy for ltl shipments”
DESCRIPTION
Milliken Lagrange ISYE 6203 PROJECT “Evaluation of Consolidation Strategy for LTL Shipments”. Chunhao GAO Halil Ozan GOZBASI Hashai PAPNEJA Jin SHI Lin WAN Jie ZHU. Company Overview. Textile Manufacturing Industry Produces finished fabrics for rugs and carpets - PowerPoint PPT PresentationTRANSCRIPT
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Milliken Lagrange ISYE 6203 PROJECT
“Evaluation of Consolidation Strategy for LTL Shipments”
Chunhao GAO
Halil Ozan GOZBASI
Hashai PAPNEJA
Jin SHI
Lin WAN
Jie ZHU
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Company Overview
Textile Manufacturing Industry Produces finished fabrics for rugs and
carpets Synthetic fabrics used in such goods as
apparel, automobiles, tennis balls, and specialty textiles
Milliken operates more than 60 plants worldwide
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Project Topic
Evaluation of consolidation option for Less-Than-Truckload (LTL) shipments
Plant in Lagrange,GA Customers, almost every state in USA
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Less-Than-Truckloadvs. FTL Consolidation
Small shipments Send Directly from Plant
to Customers
LTL
LTL
LTL
LTL
FTL
Customer 1
Customer 2
Plant
DC
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Solution Approach
Data Analysis Cost Structure
Parcel, LTL, FTL Aggregating Customers
3-Zip Customers (30332, 30345, 30358)-> 303) Reduce Number of Customers
Focus on customers which constitute 90% of the transportation cost
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Data Analysis- Cost Structure
Cost Structure
15%
72%
13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Parcel FTL LTL
Shipment Type
Cost
Parcel
FTL
LTL
Consolidation Strategy to decrease LTL costs
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Data Analysis - Aggregation
Number of 3-Zip Customers: 792
90% Tail : 325
Size reduced by ~60%
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Mapping the Demand by Total Freight
demand distribution by Total_Freight13.7% to 1 (75)7.1% to 13.7% (64)5.0% to 7.1% (60)3.3% to 5.0% (70)0% to 3.3% (74)
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Mapping the Demand by Total Trucks
demand distribution by Total_#Trucks3.3 to 19.2 (79)1.7 to 3.3 (68)1 to 1.7 (56)0.6 to 1 (58)0.1 to 0.6 (82)
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Candidate DC Selection
demand distribution by Total_Freight13.7% to 1 (75)7.1% to 13.7% (64)5.0% to 7.1% (60)3.3% to 5.0% (70)0% to 3.3% (74)
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Model Building
Parameters DCs candidate ofindex :i
customers zipdigit -3 ofindex :j rate FTL :f ($/mile)
i DC plant to from Distance :id (mile)
jcustomer toi DC from rate LTL :ijl ($)
DC selected aon load minimum :c (truck-load) truckafor factor load :lf
jcustomer toshipments ofamount :jt (truck-load)
daysshipment ofnumber :DAYS frequency shipment on rate service :r
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Model Building
Decision Variables
otherwise 0
selected is DCith theif 1iY
otherwise 0
i DC toassigned is jcustomer if 1ijX
i DC plant to from needed Trucks ofNumber iZ
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Objective & Constraints
i j
ijiji
ii lXdfZMinimize
Subject to DC a toassigned iscustomer Each 1 jX
iij
i DC toassigned iscustomer any if 1 bemust Y , ijiYX iij
selected is i DC if i DCby served be illcustomer w 1least At iXYj
iji
loadenough hasit ifonly chosen be tois DCA iYctX ij
jij
Number of trucks needed for shipments consolidated at DC ii ij jj
lf Z X t i
frequencyshipment by i DCat needed trucksofNumber iYrDAYSZ ii
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Parameter Estimation
CZARLITE LTL Pricing Software Prices from each candidate DC to every 3-digit
customer region which are closer than 700 miles.
For numerical comparability
We have real LTL from Plant to CustomersDiscount_Rate= Real_LTL_Cost / CZARLITE LTL Cost
Update all prices by
LTL(model) Cost= CZARLITE LTL Cost* Discount_Rate
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Results
Consolidation vs Current Strategy
-9.07%
9.21%
7.74%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
1 2 3 4 5
Frequency (Shipments / Week)
Cost
Red
uct
ion
Benefits from Consolidation Strategy is Related to Frequency
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Frequency & Consolidation
Low frequency increases consolidation of loads into each truckLess number of trucks are used in consolidation
0
0.2
0.4
0.6
0.8
1
1.2
Frequency 2 Frequency 3 Frequency 5
Frequency-Costs
FTL LTL
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Frequency 3:
Shipment Type Region Size
LTL from Plant 59%
DC1 in NC 17%
DC2 in AL 11%
DC3 in CA 12%
Total Assignment to DCs
41%
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Frequency 3: LTL from Plant
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Frequency 3: DC1 in NC
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Frequency 3: DC2 in AL
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Frequency 3: DC3 in CA
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Implementation
First Approach: Ship from Plant to DC`s in a pre-agreed
frequency-regardless of the loads Second Approach:
Estimate a Threshold Level for each DC Check accumulated shipments
If total load is greater than Threshold Send a Full Truck to DC
Else LTL to customer from Plant
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Conclusion & Future Work
Develop implementation techniques Estimation of Threshold Levels
Take more product types into consideration (such as chemicals)
Try to use LTL rates from current carriers instead of Czarlite for a more accurate model solution
Consider other costs related to consolidation DC space cost Material Handling cost
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Thanks..
Milliken Company Prof. Vande Vate
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Additional Slides
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Frequency 2: LTL from Plant
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Frequency 2: DC1 in NC
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Frequency 2: DC2 in AL
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Frequency 1: DC3 in CA