The Flexible Scheduled Service Network Design Problem

Abstract

The scheduled service network design problem (SSNDP) can support planning the transportation operations of consolidation carriers given shipment-level service commitments regarding available and due times. These available and due times impact transportation costs by constraining potential consolidation opportunities. However, such available and due times may be changed, either because of negotiations with customers or redesigned internal operations to increase shipment consolidation and reduce transportation costs. As changing these times can lead to customer service and operational issues, we presume a carrier seeks to do so for a limited number of shipments. We propose a new variant of the SSNDP, the flexible scheduled service network design problem, that identifies the shipments for which these times should be changed to minimize total transportation and handling costs. We present a solution approach for this problem that outperforms a commercial optimization solver on instances derived from the operations of a U.S. less-than-truckload freight transportation carrier. With an extensive computational study, we study the savings potential of leveraging flexibility and the operational settings that are fertile ground for doing so.