MILLIKEN Domestic Network Lagrange, GA April, 20th 2006

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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 NetworkLagrange, GAApril, 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
  • 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 Current Network LTL LTL Lagrange, GA Current Situation Demand Distribution Solution 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 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 Agenda
  • Current Business Model
  • Demand Distribution
  • Proposed Solution
  • Summary
  • 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 Demand Aggregation by 3 Digit ZIP Current Situation Demand Distribution Solution Agenda
  • Current Business Model
  • Demand Distribution
  • Proposed Solution
  • Summary
  • 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 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 Model Decision Variables xij = yi = wj = Current Situation Demand Distribution Solution 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 Model Min Subject to: j i, j i xij= binary yi= binary wj= binary Current Situation Demand Distribution Solution 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 Results - North East
  • Projected cost savings from consolidation:
  • Current Situation Demand Distribution Solution 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 Results - West
  • Projected cost savings from consolidation:
  • Current Situation Demand Distribution Solution Agenda
  • Current Business Model
  • Demand Distribution
  • Proposed Solution
  • Summary
  • 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
  • Questions?
  • Related Search
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