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Large-Scale, Less-than-Truckload Service Network Design

Department of Decision Sciences, School of Business, The George Washington University, Washington, DC 20052
School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332
J. B. Hunt, Lowell, Arkansas 72745
jarrah{at}gwu.edu
ejohnson{at}isye.gatech.edu
luke_neubert{at}jbhunt.com

We present a novel formulation for the service network design problem in the context of large-scale, less-than-truckload (LTL) freight operations. The formulation captures the basic network design constraints; the load-planning requirement that all freight at a location, irrespective of the freight's origin, loads to the same next terminal; and other important LTL-specific requirements. Our modeling scheme fragments the underlying massive network design model with up to 1.3 million 0–1 variables and 1.3 million rows into a separate and efficient integer programming (IP) problem for each destination terminal along with a coordinating master network design problem. We produce high-quality solutions in very reasonable CPU times (2 hours) using slope scaling and load-planning tree generation with corresponding potential annual savings of $20–25 million dollars for the target company for which the research was conducted.

Subject classifications: integer programming; transportation; shipping; multicommodity networks.
History: Received May 2006; revision received January 2008; accepted January 2008.