Modeling and evaluating shipment consolidation in a logistics network

This dissertation studies the strategy of shipment consolidation which some firms use to distribute their products. The research has developed an original algorithm which mathematically solves a shipment consolidation problem. Using this algorithm, the research evaluates how different factors influence logistics unit costs for a firm suing a shipment consolidation strategy.; Regulatory reform has expanded the set of different transport options which firms use to ship goods. These changes have enabled a large percentage of industrial firms to use a shipment consolidation strategy. Shipment consolidation refers to the strategy of combining multiple shipments to multiple destinations in a single vehicle. This strategy allows a firm to reduce costs and increase service. To use a shipment consolidation strategy rationally, logistics managers need to select the appropriate transport option and routing of each shipment.; This dissertation presents a new heuristic mathematical model to solve the shipment consolidation problem. The shipment consolidation problem is analogous to a combined transportation mode and vehicle routing problem. The new algorithm should produce better and more efficient solutions to the shipment consolidation problem. The research presents an application of the algorithm which verifies and validates the model's performance.; To illustrate the significance of different policy decisions, the project evaluates how five different factors affect logistics unit costs. The research examines each critical factor at two levels in a single and multiple echelon logistics network using a computer simulation model. The simulation model imitates a firm which has the principal objective of minimizing logistics costs and selectively uses shipment consolidation. The statistical significance and relative magnitude of the relationship between different factors and logistics unit costs varies across firms and echelons. The experimental results indicate that the context of the network determines the importance of the factor.; The results of this project are congruent with existing network consolidation studies and suggest that factors produce similar results across different types of consolidation. While the results indicate fairly robust network performance, researchers should not generalize the findings beyond the project's assumptions. Future research can relax the assumptions to expand the generalizability of the research results.