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Abstract
An important question in a freight consolidation programme is: When (or how often) should a vehicle transporting a load of orders consolidated over time be dispatched? Dispatching too early results in higher per-unit transportation costs, while continuing to accumulate decreases customer service and increases inventory holding costs. This paper presents a heuristic decision model, based on concepts of CuSum quality control charts, to decide when to dispatch a consolidated load. The model recognises that target-based dispatch policies derived from analysis of long-run average performance may not perform well for individual realisations of the order accumulation process. Testing, via computer simulation using various order input distributions, shows that several variations of the basic model perform as well or better than target-based approaches in terms of shipment delay, although typically at higher average costs. As well as being a unique approach to the dispatch timing question, this model emphasises the importance of monitoring the accumulation of orders.
Acknowledgements
The author is indebted to Shashi Khatri for coding the computer simulations, and to anonymous reviewers for their comments and suggestions. Financial support for this work was provided by The Natural Sciences and Engineering Research Council of Canada, grant #OPG 239147-2001.