Coordinating product distribution and empty equipment allocation decisions in large networks

General Motors uses large equipment fleets (railcars and trucks) for shipping vehicles from assembly plants to dealers. Mode and routing decisions for product distribution (loaded movement decisions) affect where equipment is needed and where it will become available. This, in turn, affects decisions on allocating empty equipment to reloading points (empty movement decisons). Hence, loaded and empty movement decisions are interrelated. The benefits of coordinating empty equipment allocation decisions over a network are well known. Typically, however, loaded and empty movement decisions are made separately. This research studies the savings potential from coordinating loaded and empty movements in large networks. A tactical planning model is developed to minimize total transportation cost by making loaded and empty movement decisions simultaneously. Tests using actual GM vehicle delivery data compare total costs achieved through coordinating loaded and empty movements to total costs when these decisions are optimized separately, and to total costs when each plant operates independently. Results confirm that system-wide optimization of empty movements is important, but also show that the additional benefits of coordinating loaded and empty movements are very small, reducing total cost by less than 1% for GM’s network. Sensitivity analysis shows that savings would be only 3% under conditions most favorable to coordination. This suggests that while system-wide control of empty equipment allocation is important for reducing total costs, operational decisions on loaded and empty movements can be made separately.