Transport fleet sizing by using make and buy decision-making

Abstract

Cost reduction is among the main quoted reasons for logistics outsourcing, while transport capacities and operations are among the most outsourced logistics areas. However, according to transaction costs theory, there is often room for transport insourcing. Furthermore, nowadays many authors stress that mixed solutions can give better results than “make” or “buy” alternatives. “Make or buy” decision-making normative models, methods, and procedures in transport planning are not much explored. Instead, research is rather focused on carrier selection techniques, whereby it is supposed that outsourcing transport capacities is the most suitable solution. The purpose of this paper is to contribute to the body of literature on classical “makeor-buy” decision-making in transport fleet sizing in a non-logistics enterprise. It goes beyond the basic “make or buy” decisionmaking, and intermediate solutions (i.e., “make and buy”) are explored. Practical directions are given according to theoretical principles, and a case study is used to exemplify the main deductions. The research also has practical implications. Many enterprises in transition economies have faced the question of what to do with their in-house transport fleets. The obtained results are of interest to merchants and manufacturing enterprises that already have a private transport fleet and are considering how to rationalize it

Impact of RFID Technology on Logistic Process Efficiency in Retail Supply Chains

“…At noon the manufacturer prepares the received purchase orders and confirms the delivery which is realized the next morning (within 24 hours). Although transport resources are often outsourced [32], the delivery to the retail stores is done by the manufacturer's own means of transport (refrigerated vehicles) and the vehicle supplies a number of retail stores in one cycle. The deviation from the delivery time depends on the routing plan; the truck leaves around 4:00 a.m. and the cycle ends in 6 or 7 hours.…”

Strategic vehicle fleet management–a joint solution of make-or-buy, composition and replacement problems

“…One of the chronologically first types of optimization methods applied to fleet management problems was linear (including integer, mixed integer and binary) mathematical programming – LP. There are numerous and diverse applications of the LP to the fleet management including the following: the fleet sizing problem – FSP (Dantzig and Fulkerson, 1954; Kirby, 1959; Wyatt, 1961; Mole, 1975; Ceder and Stern, 1981; List et al , 2003 – a bi-objective, stochastic model solved with a robust optimization technique; Balac et al , 2020 – a mixed-integer linear programming (MILP) applied to a fleet of pooled automated vehicles, AVs; Zhang et al , 2020 – an MILP applied to a fleet of autonomous electric vehicles, AEVs); the fleet composition problem – FCP (Gould, 1969; Mole, 1975; Etezadi and Beasley, 1983; Bojovic et al , 2010 – problem solved with the Fuzzy Analytic Hierarchy Process method); the replacement problem – RP (Suzuki and Pautsch, 2005; Figliozzi et al , 2011; Boudart and Figliozzi, 2012; Parthanadee et al , 2012; Li et al , 2015; Buyuktahtakin and Hartman, 2016 – an MIP formulation of the parallel RP under economies of scale and technological change; Ngo et al , 2018 – an integer linear programming (ILP) model solved using a branch-and-bound algorithm; Emiliano et al , 2020 – an integer programming model integrating both budgetary and environmental constraints); the vehicle assignment problem – VAP (Rushmeier et al , 1997; Ziarati et al , 1999 – problem solved with a customized branch-and-cut algorithm); the vehicle routing problem – VRP (Taillard, 1999 – HFFVRP); the mixed FCP/VRP (Golden et al , 1984 – FSMVRP; Vis et al , 2005 – FSMVRPTW solved with simulation) and the make-or-buy problem – MoB (Klincewicz et al , 1990; Stojanovic et al , 2011).…”

The Distribution of Marshalling Work of Industrial and Mainline Rail Transport

“…A significant effect on the future of the forwarding, transport and logistics sector will be based on the strategies chosen by the companies. One of the strategic decisions is to determine the transport fleet size, which can be supported by the use of make and buy decision-making [2].…”