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Transportation Management

Transportation Management. Transport Functionality. Product Movement Product Storage. Transport Principles. Economy of Scale Economy of Distance Cost per unit of weight Cost per unit of weight

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Transportation Management

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  1. Transportation Management Transportation Management Senator Nur Bahagia@

  2. Transport Functionality Product Movement Product Storage Transportation Management Senator Nur Bahagia@

  3. Transport Principles Economy of Scale Economy of Distance Cost per unit of weight Cost per unit of weight decrease as the size of decrease as a shipment increase distance increase Transportation Management Senator Nur Bahagia@

  4. Transport Regulation Economic Regulation Safety & Social Transportation Management Senator Nur Bahagia@

  5. Transportation Mode • Rail • Highway • Water • Pipeline • Air Transportation Management Senator Nur Bahagia@

  6. Operating Transportation Mode Performance *) 1=Highest Transportation Management Senator Nur Bahagia@

  7. Transportation Mode Cost &Services *) 1=Highest **) 1= Fastest ***) 1=Least Transportation Management Senator Nur Bahagia@

  8. Intermodal Transportation Combines two or more modes to take advantage of the inherent economies of each and thus an integrated services at lower cost Piggyback/TOFC/COFC Containerships Coordinated Air Truck Transportation Management Senator Nur Bahagia@

  9. Choice of Transport Mode Trade of Inventory Cost Transportation Cost Transportation Management Senator Nur Bahagia@

  10. Choice of Transport Mode PlantWarehouse Inventory: 100.000 100.000 unit Price at Plant : $30/unit Carrying Cost : 30% of price/unit/year Transport Rate/R Transit Time/T Number of Mode ($/unit) (days) shipment/year Rail 0.10 21 10 Piggyback 0.15 14 20 Truck 0.20 5 20 Air 1.40 2 40 It is estimated that for every day that transit time can be reduced from the current 21 days, average inventory levels can be reduced by 1%, which mode to be selected if demand (D) was 700.000/year ? Transportation Management Senator Nur Bahagia@

  11. Criteria Total cost = Inventory Cost + Transportation Cost • Plant • In-Transit • Warehouse • Transportation Cost (C.Trans) = R x D • In-Transit Inventory Cost (C.In-Trans)= ICDT/365 • Plant Inventory Cost (C.Plant) = ICQP/2 • Warehouse Inventory Cost (C.Ware) = IC’QW/2 • QP = 100.000/N IC = 0.3 x 30 • QW = 100.000/N IC’ = 0.3 x (30 +R) Transportation Management Senator Nur Bahagia@

  12. Solution Transportation Management Senator Nur Bahagia@

  13. Exercise: Choice of Transport Mode PlantWarehouse Inventory: 100.000 50.000 unit Price at Plant : $20/unit Carrying Cost : 30% of price/unit/year Transport Rate/R Transit Time/T Number of Mode ($/unit) (days) shipment/year Rail 0.10 25 10 Piggyback 0.15 15 20 Truck 0.25 8 20 Air 2.00 2 40 It is estimated that for every day that transit time can be reduced from the current 25 days, average inventory levels can be reduced by 1%, which mode to be selected if demand (D) was 500.000/year ? Transportation Management Senator Nur Bahagia@

  14. Transport Participants Public Government Shipper Consignee Carrier Internet.com Transportation Management Senator Nur Bahagia@

  15. Structure of Transport Industry Shippers Middlemen Carriers Interchanges Customers Air Express Warehousing Retailer Retailer Rail Inter-change Point Processor Retailer Motor Carriers Pooling Yards Manager Retailer Retailer .Operation .Order processing .Tracking .Billing Ocean Others End Consumer Private Fleets Transportation Management Senator Nur Bahagia@

  16. Transportation Service • Traditional Carriers • Package Service • Ground Package Service • Air Package Service Transportation Management Senator Nur Bahagia@

  17. Non-operating Intermediaries • Freight Forwarders • Profit business that consolidate small shipments from various customers into bulk shipment and then utilize a common carriers for transport • Shipper Association/Cooperative • Voluntary nonprofit entities where members collaborate to gain economies of transportation • Brokers • Coordinate transportation arrangement for shippers, consignees, and carriers. Transportation Management Senator Nur Bahagia@

  18. International Trade Specialist • International FW • Non vessel-Operating Common Carrier (NVOCCs) • Custom House Brokers • Export Management Company • Export Trading Company Transportation Management Senator Nur Bahagia@

  19. International FW • Advice on Acceptance of LC • Booking Space on Carriers • Preparing an Export Declaration • Preparation an air Waybill or Bill of Lading • Obtaining Consular Document • Arranging for Insurance • Preparing and Sending Shipping Notice and Documents • Serving as General Consultant on Export Matters Transportation Management Senator Nur Bahagia@

  20. Documentation • Bill of Lading • Freight Bill • Freight Claims • Loss, Damage and Delay Claims • Overcharges Transportation Management Senator Nur Bahagia@

  21. International Transport Document Importing • Arrival Notice • Custom Entry • Carriers Certificate and Release Order • Delivery Order • Freight Release • Special Custom Invoice Exporting • Bill of lading • Dock Receipt • Delivery Instruction • Export Declaration • Letter of Credit • Consular Invoice • Commercial Invoice • Certificate of Origin • Insurance Certificate • Transmittal Letter Transportation Management Senator Nur Bahagia@

  22. Transport Management • Transport Planning • Vehicle Routing and Scheduling • Delivery Execution and Shipment Tracking • Performance Management Transportation Management Senator Nur Bahagia@

  23. Economic Driver Cost • Distance • Volume • Density • Stow-ability • Handling • Liability • Market Transportation Management Senator Nur Bahagia@

  24. Rate • Volume Related Rates • Distance Related Rates • Uniform rates • Proportional rates • Tapering rates • Blanket rates • Demand Related rates Transportation Management Senator Nur Bahagia@

  25. Line Haul rates • By Product • Class Rates • Contract rates • Freight all kinds • By Shipment Size • Miscellaneous Rates • Cube rates • Import-Export Rates • Deffered Rates • Released Value Rates • Ocean Freight Rates Transportation Management Senator Nur Bahagia@

  26. Special Service Charges • Special Line Haul Services • Diversion and Re-consignment • Transit Privileges • Protection • Terminal Services • Pickup and Delivery • Switching • Demurrage and Detention Transportation Management Senator Nur Bahagia@

  27. Operation Management • Equipment Scheduling • Load planning • Routing • Carrier Administration • Carrier Selection Transportation Management Senator Nur Bahagia@

  28. Freight Consolidation • Reactive consolidation • Market Area • Cost Cutting Strategy • Schedule Delivery • Pooled Delivery • Proactive Consolidation • Preorder Planning • Multi-firm Consolidation Transportation Management Senator Nur Bahagia@

  29. Pricing Strategy • Cost of Service • Value of Service • Combination Pricing • Net-Rates Price Transportation Management Senator Nur Bahagia@

  30. Vehicle Routing and Scheduling • Separate and Single Origin and Destination Point • Multiple Origin and Destination Points • Coincident Origin and Destination Points Transportation Management Senator Nur Bahagia@

  31. Separate and Single Origin and Destination Point Transportation Management Senator Nur Bahagia@

  32. Shortest Route Solution Origin A B 90 84 E I 84 66 138 C 132 90 132 348 F 60 126 156 H 132 48 126 D 48 J G 150 Destination Transportation Management Senator Nur Bahagia@

  33. Step Solved Its Closest Total Time n’th Nearest Its Min. Its Last Nodes Conc.un Sl Involved Node Time Con’tion 1 A B 90 B 90 AB* A D 138 A C 348 2 A C 138 C 138 AC A D 348 B C 90+66=156 B E 90+84=174 3 A D 348 B E 90+84=174 E 174 BE* C D 138+156=294 C F 138+90=228 4 A D 348 C D 138+156=294 C F 138+ 90=228 F 228 CF E F 174+132=306 E I 174+84 =258 Transportation Management Senator Nur Bahagia@

  34. Step Solved Its Closest Total Time n’th Nearest Its Min. Its Last Nodes Conc.un Sl Involved Node Time Con’tion 5 A D 348 C D 138156=294 E I 174+84=258 I 258 EI* F G 228132=360 F H 228+60=288 6 A D 348 C D 138+156=294 F G 228+132=360 F H 228+ 60=288 H 288 FH I H 258+132=390 I J 258+126=384 7 A D 348 C D 138+156=294 F G 228+132=360 H G 288+ 48=336 G 336 HG I J 258+126=384 Transportation Management Senator Nur Bahagia@

  35. Step Solved Its Closest Total Time n’th Nearest Its Min. Its Last Nodes Conc.un Sl Involved Node Time Con’tion 8 G J 336+150=486 H J 288+126=414 I J 258+126=384 J 384 IJ* Shortest Route : A B E I J ( 384) Transportation Management Senator Nur Bahagia@

  36. Shortest Route Solution Origin A B 90 84 E I 84 66 138 C 132 90 132 348 F 60 126 156 H 132 48 126 D 48 J G 150 Destination Transportation Management Senator Nur Bahagia@

  37. Multiple Origin and Destination Points Transportation Management Senator Nur Bahagia@

  38. Multiple Origin and Destination Points Q P 1 2 3 8 Transportation Management Senator Nur Bahagia@

  39. Data 1 2 3 4 5 6 7 8 A B C D E F G H Supply P 12 24 21 20 21.5 19 17 20 100 Q 24 15 28 20 18.5 19.5 24 28 45 Dmd 22 14 18 17 15 13 15 20 Transportation Management Senator Nur Bahagia@

  40. Component of Model • Performance Criteria : Min. Cost • Variable Decision : • Number of product to be supplied from plant i (Si) • Number of product to be transported from plant i to retailer j( Xij) • Constraints: • Supply • Demand Transportation Management Senator Nur Bahagia@

  41. Model Formulation Min Z =12X11 + 24X12 + 21X13 + 20X14 + 21.5X15 + 19X16 + 17X17 + 20X18 + 24X21 + 15X22 + 28X23 + 20X24 + 18.5X25 + 19.5 X26 + 24 X27 + 28X28 Subject to: 1). X11 + X12 + X13 + X14 + X15 + X16 +X17 + X18 <=100 2). X21 + X22 + X23 + X24 + X25 + X26 +X27 + X28 <= 45 Transportation Management Senator Nur Bahagia@

  42. Model Formulation 3). X11 + X21 = 22 4). X12 + X22 = 14 5). X13 + X23 = 18 6). X14 + X24 = 17 7). X15 + X25 = 15 8). X16 + X26 = 13 9). X17 + X27 = 15 10). X18 + X28 = 20 All Variable Non Negative Transportation Management Senator Nur Bahagia@

  43. Optimal Solution 1 2 3 4 5 6 7 8 A B C D E F G H Supply P 22 - 18 17 - 13 15 4 89 Q - 14 - - 15 - - 16 45 Dmnd 22 14 18 17 15 13 15 20 134 Minimal Cost = $ 2583.50 Transportation Management Senator Nur Bahagia@

  44. Optimal Solution Q P 1 2 3 4 5 6 7 8 Transportation Management Senator Nur Bahagia@

  45. Transshipment Model Q P R R 1 4 5 6 8 Transportation Management Senator Nur Bahagia@

  46. Additional Cost Data Cross Dock 4 5 6 P 11 Q 10 Cross Dock - 6 5 5 Transportation Management Senator Nur Bahagia@

  47. Component of Model • Performance Criteria : Min. Cost • Variable Decision : • Number of product to be supplied from plant i (Si) • Number of product to be transported from plant i to Cross Dock ( Xic) • Number of product to be transported from plant i to retailer j( Xij) • Number of product to be transported from Cross Dock c to retailer j( Xcj) Transportation Management Senator Nur Bahagia@

  48. Component of Model • Constraints: • Supply • Demand • Cross Dock Transportation Management Senator Nur Bahagia@

  49. Model Formulation Min Z =12X11 + 24X12 + 21X13 + 20X14 + 21.5X15 + 19X16 + 17X17 + 20X18 + 24X21 + 15X22 + 28X23 + 20X24 + 18.5X25 + 19.5 X26 + 24 X27 + 28X28 + 11X1c +10X2c +2Xc+6 Xc4 + 5 Xc5 + 5Xc6 Subject to: 1). X11 + X12 + X13 + X14 + X15 + X16 +X17 + X18 <=100 2). X21 + X22 + X23 + X24 + X25 + X26 +X27 + X28 <=45 3). X1c + X2c - Xc = 0 4). Xc - Xc4 + Xc5 + Xc6 = 0 5). Xc <= 30 Transportation Management Senator Nur Bahagia@

  50. Subject to: 6). X11 + X21 = 22 7). X12 + X22 = 14 8). X13 + X23 = 18 9). X14 + X24 + Xc4 = 17 10). X15 + X25 + Xc5 = 15 11).X16 + X26 + Xc6 = 13 12). X17 + X27 = 15 13). X18 + X28 = 20 All variables Nonnegative Transportation Management Senator Nur Bahagia@

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