The Design of Vehicle Routes for a Third Party Logistics Service Provider Using Simulated Annealing Algorithm

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Abstract

Increased globalisation and the subsequent competitive pressures have emphasised the importance of Third-Party Logistics (3PL) in managing logistics processes as well as customer and supplier relationships in logistics and supply chain management. Organisations can gain approximately 9% of saved costs and a 15% increase in capacity and quality, on average, through outsourcing their logistics activity to 3PL service providers. Transportation planning and management is a basic service provided by 3PL service providers with the goal to provide customer value in excess of their cost to serve customers. Since the transportation cost constitutes a significant fraction of the total logistics cost, 3PL service providers are motivated to improve their efficiency by ensuring on-time deliveries and pick-ups by designing least-cost routes with efficient routing strategies. In this paper, a Simulated Annealing (SA)-based metaheuristic algorithm was developed for and used by a 3PL service provider for the efficient routing of the vehicles for pick-up for an automotive parts manufacturing company.
Original languageEnglish
JournalInternational Journal of Business Performance Management
Volume11
Issue number1/2
Pages (from-to)1-18
Number of pages18
ISSN1368-4892
DOIs
Publication statusPublished - 2009

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