Design of Less-than-Truckload Networks: Models and Methods

Abstract

We consider the design of a two-level transportation network. This type of network is typically established in national European less-than-truckload businesses. Cargo shipment from source to sink customers can be divided into three segments. Goods are picked up at customer locations and shipped to a source depot. After that there is a long-haul transport to a sink depot. Finally cargo is distributed from the sink depot to its final destination. In order to formalize this problem, two models, one linear and one quadratic, are proposed and analyzed. The goal of optimizing this NP-hard problem is to minimize total costs by determining the number, position and capacity of depots. In addition, customers have to be allocated to depots. To solve the optimization problem, we propose an approach which utilizes a relaxation of the long-haul transports. The resulting problem is the well-known facility location problem. Using this approach, real-world problems can be solved very quickly in high quality, for both an uncapacitated and a capacitated version of the model.