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MILLIKEN – Domestic Network Lagrange, GA April, 20th 2006

MILLIKEN – Domestic Network Lagrange, GA April, 20th 2006. Tibor Banach, Aixa Cintron, Benedikt Finkenauer, Thilo Frankenhauser, Meeti Saraswat, Narendhra Seshadri. Agenda. Current Business Model Demand Distribution Proposed Solution Summary. Current Network.

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MILLIKEN – Domestic Network Lagrange, GA April, 20th 2006

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  1. MILLIKEN – Domestic NetworkLagrange, GAApril, 20th 2006 Tibor Banach, Aixa Cintron, Benedikt Finkenauer, Thilo Frankenhauser, Meeti Saraswat, Narendhra Seshadri

  2. Agenda • Current Business Model • Demand Distribution • Proposed Solution • Summary

  3. Current Network • Milliken ships various products such as broadloom, tiles, rugs, mats and chemicals out of their facility in Lagrange, GA • Products are shipped via LTL carriers to various locations all over the United States • Depending on the size of the shipment, the destination and the service required, Milliken uses a variety of shippers Current Situation Demand Distribution Solution

  4. Current Network LTL LTL Lagrange, GA Current Situation Demand Distribution Solution

  5. Problem Outline • Current shipments are mostly LTL and parcel • Can shipments to the same geo be consolidated via FTL? • Is consolidation economically feasible? • Where should the consolidation hubs be located? • How is service affected by consolidation? Current Situation Demand Distribution Solution

  6. LTL TL TL TL Issues to Consider • Is consolidation economically feasible? • Can shipments to the same geo be consolidated via FTL? • Where should the consolidation hubs be located? Current Situation Demand Distribution Solution

  7. Agenda • Current Business Model • Demand Distribution • Proposed Solution • Summary

  8. Data Extraction • Chemicals and “Miscellaneous” items removed from the demand data • Shipments with 0 freight costs removed • Demand available in the form of units and yards. Conversion of data to fraction of a 53 ft. trailer: • Demand aggregated by 3-digit ZIP code • Demand averaged by number of days shipped to obtain a daily fraction of TL Current Situation Demand Distribution Solution

  9. Demand Aggregation by 3 Digit ZIP Current Situation Demand Distribution Solution

  10. Agenda • Current Business Model • Demand Distribution • Proposed Solution • Summary

  11. Data Preparation for the Model • Distances • Calculated from Lagrange to all 3-digit ZIP codes of demand points • Calculated to and from all 3-digit ZIP codes of demand points • Freight Costs • TL Costs calculated from existing TL shipments in customer data. • LTL Costs calculated for shipments of different sizes and for different distances traveled. For example: Current Situation Demand Distribution Solution

  12. NE WEST Restrictions • Discard extremely small orders • Discard orders that fill over 0.6 of a truck • Restrict assignment of demand points to hubs within a 500 mile radius on the west and a 300 mile radius on the east • This created two sub-models – one for NE and one for West Current Situation Demand Distribution Solution

  13. Model Decision Variables xij = yi = wj = Current Situation Demand Distribution Solution

  14. Model • Parameters • LTLcij = Less-than-truck load cost for shipping from hub i to customer j • TLci = Truck load cost for the shipment that goes from Lagrange to hub i • LTLcj = Less-than-truck load cost for shipping from Lagrange to customer j • Demandj = Demand of customer j Current Situation Demand Distribution Solution

  15. Model Min Subject to: j i, j i xij= binary yi= binary wj= binary Current Situation Demand Distribution Solution

  16. Assigned to 023 (Boston area) Assigned to 231 (Richmond area) Assigned to 302 (Lagrange) Results - North East • The model recommends the opening of two hubs in the North East region located at ZIP codes 023 and 231 023 231 302 - Lagrange Current Situation Demand Distribution Solution

  17. Results - North East • Projected cost savings from consolidation: Current Situation Demand Distribution Solution

  18. Assigned to 752 (Dallas area) 850 752 Assigned to 850 (Phoenix area) Results - West The model recommends the opening of two hubs in the western region located at ZIP codes 752 and 850 Current Situation Demand Distribution Solution

  19. Results - West • Projected cost savings from consolidation: Current Situation Demand Distribution Solution

  20. Agenda • Current Business Model • Demand Distribution • Proposed Solution • Summary

  21. Summary • There is opportunity to consolidate shipments for projected annual savings of $284,687 ($187,429 from the Western region and $97,258 from the North-Eastern region) • Orders that can be shipped as parcels or can fill a truck by themselves should not be consolidated with other shipments • On any given day, savings can be achieved by consolidating to a hub if the minimum requirement for that hub is met. Eg. 0.71 of a TL for 752 (Dallas) • Next Steps: Evaluate vehicle routing options among multiple hubs

  22. Questions?

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