PLANNING AND CONSOLIDATING SHIPMENTS FROM A WAREHOUSE

A typical warehouse or distribution centre ships material to various c ustomer locations across the country, using various modes of transport ation. Each mode has different constraints on size of shipment, differ ent cost structures and different transportation times. Typically, for a given warehouse there are certain customer locations that receive f requent shipments of material. It is often possible, therefore, for th e warehouse to consolidate different orders for the same customer loca tion into a single shipment. The transportation mode and the day of sh ipment must be chosen such that the consolidated shipment meets the si ze constraints and arrives within an agreed-upon 'delivery window'. In preparing a warehouse distribution plan, a planner seeks to achieve t ransportation economies of scale (by consolidating two or more orders into fewer shipments) while levelling the workload on warehouse resour ces and ensuring that material arrives at a customer location during t he acceptable delivery window. The problem of deciding what shipments to make daily can be formulated as a set partitioning problem with sid e constraints. This paper describes a heuristic solution approach for this problem. Computational experiments using actual warehouse select activity indicate that, for moderate-size problems, the heuristic prod uces solutions with transportation costs that are within a few percent of optimal. Larger problems found in practice are generally too large to be solved by optimal algorithms; the heuristic easily handles such problems. The heuristic has been integrated into the transportation p lanning system of a leading distributor of telecommunications products .