Decentralized inventory control policies for equipment management in a many-to-many network

This paper investigates decentralized control methods for managing equipment inventories in the longhaul portion of less-than-truckload (LTL) networks. Performance is measured with respect to: (1) cost of moving empty equipment, (2) cost of owning equipment, and (3) backorders due to stocking out of empty equipment. Our basic approach has two steps: solve a static linear program to determine where to obtain empty equipment, and apply a pull-based re-order rule to determine when to move empty equipment. The method is applied to a non-stationary dataset representing one year of shipments for one of the United States' largest LTL carriers. With sufficient systemwide inventory, transportation cost was found to be very close (<1% difference) to its lower bound (derived from static data), with infrequent backorders.