Transportation modelling

Most of Large shippers invest their time and money by collecting, analyzing and maintaining data to handle daily transportation planning and execution.

When codified and integrated into the shipper's transportation system, this data becomes the organization's transportation policy. This policy is comprised of lanes, modes, rates, service levels, capacity, and a multitude of other variables that must work in concert to drive daily decision-making.

The Transportation policy is that which defines the framework upon which all transportation decisions will be made.

STRATEGIC PLANNING: DETERMINISTIC VS. STOCHASTIC

A deterministic planning tool can be very useful in daily planning. Safety stock concept is exists here because of no prediction of customer demand, lead times or order fill rates with certainty. Latest technology uses combined stochastic optimization and simulation.

Stochastic concept is useful because of no prediction of customer demand, lead times, or order fill rates with certainty latest technology uses this formula.

How does it Supports to Real World

To understand process lets we take an example of prepaid to collect conversion, which is prepaid and which one is collect shipments.

Prepaid to collect is long term shipments process with variability and different phase’s shippers has to consider.

Some of variables are as below:

-Type of order and Quantity. (LTL or FTL)

• Fuel Charges
• Freight Rates
• Transport Lead time

Deterministic Strategy assumes very little quantity of freight and customer thought it is fuel cost and rate is surcharges through the year.

Stochastic strategy uses real data. It is not defined snapshot of data.

Most companies take deterministic approach because of long term business plan and for efficient transportation policy.

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