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High level
Traveling salesman
problem
Vehicle routing
problem
Heterogeneous fleet
VRP
Decisions: Uncertainty
Operational decisions
I xij : the amount of goods transported from supply location Tactical decisions
i ∈ S to demand location j ∈ D.
Goal:
I Minimize the total transportation costs of satisfying all
demand.
AMP
Transportation problem
High level problems
Transportation
problem
Problem network: Transshipment
problem
Multiple commodities
Summary
3 Low level problems
Shortest path problem
Traveling salesman
c 13 problem
c 23 Uncertainty
Operational decisions
c 24 Tactical decisions
2 c25
5
AMP
Transportation problem
High level problems
Transportation
problem
Transshipment
problem
Linear programming formulation: Multiple commodities
Summary
Low level problems
Shortest path problem
Traveling salesman
problem
Vehicle routing
X
min cij xij problem
Heterogeneous fleet
i∈S,j∈D VRP
X Feeder network design
problem
xij ≤ si ∀i ∈ S (Supply capacity) Comparison
j∈D Uncertainty
X Operational decisions
xij = dj ∀j ∈ D (Demand constraint) Tactical decisions
i∈S
xij ≥ 0 ∀i ∈ S, j ∈ D
AMP
Transportation problem
! The costs are incurred per unit transported. High level problems
Transportation
problem
! Transport of fractional units is allowed Transshipment
problem
Multiple commodities
Summary
X The model works best when in reality supply and demand are Low level problems
much greater than vehicle capacity. Shortest path problem
Traveling salesman
problem
Vehicle routing
Example: problem
Heterogeneous fleet
I Optimal solution: transport 1000.1 units from A to B. VRP
Feeder network design
I Vehicle capacity: 1 unit problem
Comparison
I Model costs of 1000.1 vehicles does not differ much from
Uncertainty
using 1001 vehicles in reality. Operational decisions
Tactical decisions
x The model does not work well if supply and demand is small
compared to vehicle capacity.
Example:
I Optimal solution: transport 0.1 units from A to B.
I Vehicle capacity: 1 unit
I Model costs of 0.1 vehicles differs substantially from 1 vehicle
in reality.
AMP
Transshipment problem
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Summary
I Consider transporting goods from supply to demand locations Low level problems
using transshipment points. Shortest path problem
Traveling salesman
problem
Vehicle routing
problem
Example: Heterogeneous fleet
VRP
I Supply at U.S. ports Feeder network design
problem
Comparison
I Transport by ship from U.S. to European ports Uncertainty
Operational decisions
I Transshipment at European ports Tactical decisions
Goal:
I Minimize the total transportation costs of satisfying all
demand.
AMP
Transshipment problem
High level problems
Transportation
problem
Problem network: Transshipment
problem
Multiple commodities
Summary
1 c14 6 Low level problems
c1 Shortest path problem
5 Traveling salesman
c 46 problem
c 56 Uncertainty
Operational decisions
c 57 Tactical decisions
5 c58
c 34
c 35
3 8
AMP
Transshipment problem
High level problems
Transportation
problem
Linear programming formulation: Transshipment
problem
Multiple commodities
Summary
Low level problems
Shortest path problem
X Traveling salesman
min cij xij problem
Vehicle routing
(i,j)∈A problem
X Heterogeneous fleet
VRP
xij ≤ si ∀i ∈ S (Supply capacity) Feeder network design
problem
(i,j)∈A Comparison
X X Uncertainty
xij = xji ∀j ∈ T (Transshipment flow) Operational decisions
Tactical decisions
(i,j)∈A (j,i)∈A
X
xij = dj ∀j ∈ D (Demand constraint)
(i,j)∈A
xij ≥ 0 ∀(i, j) ∈ A
AMP
Transshipment problem
High level problems
Transportation
I In case a transportation connection (i, j) ∈ A has a capacity problem
Transshipment
Qij , we add the constraint problem
Multiple commodities
Summary
D I Uncertainty
Operational decisions
Tactical decisions
I Find the shortest path (SP) from the start to the end
location.
I Example: Find the shortest path from A to J in the above
network.
I This problem is occasionally referred to as the
shortest route problem.
AMP
Shortest path problem
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Summary
I Assume all costs are positive. Low level problems
Shortest path problem
Traveling salesman
problem
X Dijkstra’s algorithm can be used to solve the shortest path Vehicle routing
problem
problem with positive costs. Heterogeneous fleet
VRP
Feeder network design
problem
Comparison
Notation: Uncertainty
Operational decisions
I Let cij be the costs of traveling from node i to node j. Tactical decisions
I Let Fi be the costs of the shortest path from the start node
to node i.
AMP
Shortest path problem
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Summary
General outline of Dijkstra’s algorithm:
Low level problems
I Initialize Fi to be very high. Shortest path problem
Traveling salesman
problem
I Make a pass trough the network to update Fi . Vehicle routing
problem
I For the end node n, Fn will provide the costs of the shortest Heterogeneous fleet
VRP
path. Feeder network design
problem
Comparison
Uncertainty
Backtracking: Operational decisions
Tactical decisions
I Keep track of which node is the cheapest predecessor.
I This way the shortest path can be found by backtracking.
AMP
Shortest path problem
Dijkstra’s algorithm: High level problems
Step 1 Initialize Fi = ∞ for all nodes i in the network Transportation
problem
except the starting node 0, let F0 = 0. Transshipment
problem
Multiple commodities
Summary
Step 2 Select a node i with the lowest costs Fi among the Low level problems
nodes for which all predecessors have been Shortest path problem
Traveling salesman
”processed”. problem
Vehicle routing
problem
Heterogeneous fleet
Step 3 Select the cheapest arc (i, j) going out of the VRP
Feeder network design
current node. problem
Comparison
Uncertainty
Step 4 Update the costs Fj Operational decisions
Tactical decisions
Fj = min{Fj , Fi + cij }
1 4 5
problem
Vehicle routing
A C 6 H J problem
Heterogeneous fleet
3 VRP
Feeder network design
problem
F 5 1 Comparison
3 Uncertainty
Operational decisions
D I Tactical decisions
Initialization:
Node A B C D E F G H I J
Fi 0 ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞
Pred. - - - - - - - - - -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B 5 G problem
Multiple commodities
2 2 Summary
Low level problems
2 E 5 Shortest path problem
4 Traveling salesman
1 4 5
problem
Vehicle routing
A C 6 H J problem
Heterogeneous fleet
3 VRP
Feeder network design
problem
F 5 1 Comparison
3 Uncertainty
Operational decisions
D I Tactical decisions
Initialization:
Node A B C D E F G H I J
Fi 0 ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞
Pred. - - - - - - - - - -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B 5 G problem
Multiple commodities
2 2 Summary
Low level problems
2 E 5 Shortest path problem
4 Traveling salesman
x 4 5
problem
Vehicle routing
A C 6 H J problem
Heterogeneous fleet
3 VRP
Feeder network design
problem
F 5 1 Comparison
3 Uncertainty
Operational decisions
D I Tactical decisions
Iteration 1:
Node A B C D E F G H I J
Fi 0 ∞ 1 ∞ ∞ ∞ ∞ ∞ ∞ ∞
Pred. - - A - - - - - - -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B 5 G problem
Multiple commodities
2 2 Summary
Low level problems
x E 5 Shortest path problem
4 Traveling salesman
x 4 5
problem
Vehicle routing
A C 6 H J problem
Heterogeneous fleet
3 VRP
Feeder network design
problem
F 5 1 Comparison
3 Uncertainty
Operational decisions
D I Tactical decisions
Iteration 2:
Node A B C D E F G H I J
Fi 0 2 1 ∞ ∞ ∞ ∞ ∞ ∞ ∞
Pred. - A A - - - - - - -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B 5 G problem
Multiple commodities
2 2 Summary
Low level problems
x E 5 Shortest path problem
4 Traveling salesman
x 4 5
problem
Vehicle routing
A C 6 H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F 5 1 Comparison
3 Uncertainty
Operational decisions
D I Tactical decisions
Iteration 3:
Node A B C D E F G H I J
Fi 0 2 1 3 ∞ ∞ ∞ ∞ ∞ ∞
Pred. - A A A - - - - - -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B 5 G problem
Multiple commodities
2 2 Summary
Low level problems
x E 5 Shortest path problem
x Traveling salesman
x 4 5
problem
Vehicle routing
A C 6 H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F 5 1 Comparison
3 Uncertainty
Operational decisions
D I Tactical decisions
Iteration 4:
Node A B C D E F G H I J
Fi 0 2 1 3 5 ∞ ∞ ∞ ∞ ∞
Pred. - A A A C - - - - -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B 5 G problem
Multiple commodities
2 2 Summary
Low level problems
x E 5 Shortest path problem
x Traveling salesman
x 4 5
problem
Vehicle routing
A C x H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F 5 1 Comparison
3 Uncertainty
Operational decisions
D I Tactical decisions
Iteration 5:
Node A B C D E F G H I J
Fi 0 2 1 3 5 7 ∞ ∞ ∞ ∞
Pred. - A A A C C - - - -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B x G problem
Multiple commodities
2 2 Summary
Low level problems
x E 5 Shortest path problem
x Traveling salesman
x 4 5
problem
Vehicle routing
A C x H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F 5 1 Comparison
3 Uncertainty
Operational decisions
D I Tactical decisions
Iteration 6:
Node A B C D E F G H I J
Fi 0 2 1 3 5 7 ∞ ∞ ∞ ∞
Pred. - A A A C C - - - -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B x G problem
Multiple commodities
2 2 Summary
Low level problems
x E 5 Shortest path problem
x Traveling salesman
x 4 5
problem
Vehicle routing
A C x H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F 5 1 Comparison
x Uncertainty
Operational decisions
D I Tactical decisions
Iteration 7:
Node A B C D E F G H I J
Fi 0 2 1 3 5 6 ∞ ∞ ∞ ∞
Pred. - A A A C D - - - -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B x G problem
Multiple commodities
x 2 Summary
Low level problems
x E 5 Shortest path problem
x Traveling salesman
x 4 5
problem
Vehicle routing
A C x H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F 5 1 Comparison
x Uncertainty
Operational decisions
D I Tactical decisions
Iteration 8:
Node A B C D E F G H I J
Fi 0 2 1 3 5 6 7 ∞ ∞ ∞
Pred. - A A A C D E - - -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B x G problem
Multiple commodities
x 2 Summary
Low level problems
x E 5 Shortest path problem
x Traveling salesman
x x 5
problem
Vehicle routing
A C x H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F 5 1 Comparison
x Uncertainty
Operational decisions
D I Tactical decisions
Iteration 9:
Node A B C D E F G H I J
Fi 0 2 1 3 5 6 7 ∞ 9 ∞
Pred. - A A A C D E - E -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B x G problem
Multiple commodities
x 2 Summary
Low level problems
x E x Shortest path problem
x Traveling salesman
x x 5
problem
Vehicle routing
A C x H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F 5 1 Comparison
x Uncertainty
Operational decisions
D I Tactical decisions
Iteration 10:
Node A B C D E F G H I J
Fi 0 2 1 3 5 6 7 10 9 ∞
Pred. - A A A C D E E E -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B x G problem
Multiple commodities
x 2 Summary
Low level problems
x E x Shortest path problem
x Traveling salesman
x x 5
problem
Vehicle routing
A C x H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F x 1 Comparison
x Uncertainty
Operational decisions
D I Tactical decisions
Iteration 11:
Node A B C D E F G H I J
Fi 0 2 1 3 5 6 7 10 9 ∞
Pred. - A A A C D E E E -
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B x G problem
Multiple commodities
x x Summary
Low level problems
x E x Shortest path problem
x Traveling salesman
x x 5
problem
Vehicle routing
A C x H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F x 1 Comparison
x Uncertainty
Operational decisions
D I Tactical decisions
Iteration 12:
Node A B C D E F G H I J
Fi 0 2 1 3 5 6 7 10 9 9
Pred. - A A A C D E E E G
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B x G problem
Multiple commodities
x x Summary
Low level problems
x E x Shortest path problem
x Traveling salesman
x x 5
problem
Vehicle routing
A C x H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F x x Comparison
x Uncertainty
Operational decisions
D I Tactical decisions
Iteration 13:
Node A B C D E F G H I J
Fi 0 2 1 3 5 6 7 10 9 9
Pred. - A A A C D E E E G
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
B x G problem
Multiple commodities
x x Summary
Low level problems
x E x Shortest path problem
x Traveling salesman
x x x
problem
Vehicle routing
A C x H J problem
Heterogeneous fleet
x VRP
Feeder network design
problem
F x x Comparison
x Uncertainty
Operational decisions
D I Tactical decisions
Iteration 14:
Node A B C D E F G H I J
Fi 0 2 1 3 5 6 7 10 9 9
Pred. - A A A C D E E E G
AMP
Shortest path problem - example 1
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Summary
Low level problems
Shortest path problem
Node A B C D E F G H I J Traveling salesman
problem
Fi 0 2 1 3 5 6 7 10 9 9 Vehicle routing
Pred. - A A A C D E E E G problem
Heterogeneous fleet
VRP
Feeder network design
problem
I By backtracking we find the shortest path: A-C-E-G-J. Comparison
Uncertainty
Operational decisions
I The costs of the shortest path are FJ = 9. Tactical decisions
AMP
Shortest path problem
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Summary
X Dijkstra’s algorithm can find the shortest or cheapest route to Low level problems
Shortest path problem
transport goods from one location to another. Traveling salesman
problem
Vehicle routing
problem
x Dijkstra’s algorithm does not work with negative costs Heterogeneous fleet
VRP
(like a standard road network). Feeder network design
problem
Comparison
Uncertainty
X The algorithm can be modified to work for specific cases with Operational decisions
Tactical decisions
negative costs
(e.g. Bellman-Ford’s algorithm).
AMP
Traveling salesman problem
High level problems
Transportation
problem
I The traveling salesman problem (TSP) is the problem of Transshipment
problem
finding the shortest tour along all locations while ending back Multiple commodities
at the start location. Summary
Low level problems
Shortest path problem
Traveling salesman
problem
Vehicle routing
problem
Heterogeneous fleet
VRP
Feeder network design
problem
Comparison
Uncertainty
Operational decisions
Tactical decisions
AMP
Traveling salesman problem
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
I N: the set of nodes. Summary
Low level problems
I cij the costs of traveling from i ∈ N to j ∈ N. Shortest path problem
Traveling salesman
problem
Vehicle routing
problem
Decisions: Heterogeneous fleet
VRP
I xij : the binary variable xij = 1 when traveling directly from Feeder network design
problem
i ∈ N to j ∈ N, and xij = 0 otherwise. Comparison
Uncertainty
Operational decisions
Tactical decisions
Goal:
I Minimize the total traveling costs of visiting every location
while ending back at the start location.
AMP
Traveling salesman problem
High level problems
Transportation
problem
Transshipment
Integer linear programming formulation: problem
Multiple commodities
Summary
Low level problems
Shortest path problem
Traveling salesman
X
min cij xij problem
Vehicle routing
i,j∈N problem
Heterogeneous fleet
VRP
X
xij = 1 ∀j ∈ N (In-degree constraints) Feeder network design
problem
i∈N Comparison
X Uncertainty
xij = 1 ∀i ∈ N (Out-degree constraints) Operational decisions
Tactical decisions
j∈N
X
xij ≥ 1 ∀S ⊂ N (Subtour elimination)
i∈S,j6∈S
xij ∈ {0, 1} ∀i, j ∈ N
AMP
Traveling salesman problem
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
I The subtour elimination constraints make sure that no Summary
1 1 Operational decisions
Tactical decisions
C E
Goal:
I Minimize the total routing costs of visiting every customer
while satisfying the capacity constraints.
AMP
Vehicle routing problem
High level problems
Transportation
problem
Transshipment
Integer linear programming formulation: problem
Multiple commodities
Summary
Low level problems
Shortest path problem
Traveling salesman
X
min cij xij problem
Vehicle routing
i,j∈N problem
Heterogeneous fleet
VRP
X
xij = 1 ∀j ∈ N (In-degree constraints) Feeder network design
problem
i∈N Comparison
X Uncertainty
xij = 1 ∀i ∈ N (Out-degree constraints) Operational decisions
Tactical decisions
j∈N
X
xij ≥ b(S) ∀S ⊆ N 0 (Subtours + capacity)
i∈S,j6∈S
xij ∈ {0, 1} ∀i, j ∈ N
AMP
Vehicle routing problem
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Summary
x Computing b(S) is very difficult Low level problems
(it is a bin-packing problem). Shortest path problem
Traveling salesman
problem
Vehicle routing
! Suppose b(S) = 1 for all S ⊆ N 0 problem
Heterogeneous fleet
VRP
I (this is the case when the vehicles have enough capacity to Feeder network design
problem
visit all customers) Comparison
∀j ∈ N 0 (In-degree constraints)
problem
xijv = 1 Heterogeneous fleet
VRP
v ∈V i∈N Feeder network design
X X problem
xijv = xjiv ∀j ∈ N, v ∈ V (Flow constraints) Comparison
Uncertainty
i∈N i∈N Operational decisions
X 1 X v Tactical decisions
xijv ≥ xij ∀S ⊂ N 0 , v ∈ V (Subtour elimination)
|S|
i∈S,j6∈S i,j∈S
X X
di xijv ≤ Q v
∀v ∈ V (Vehicle capacity)
i∈N 0 j∈N
xijv ∈ {0, 1} ∀i, j ∈ N, v ∈ V
AMP
Heterogeneous fleet VRP
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Summary
Low level problems
About the subtour elimination constraints: Shortest path problem
Traveling salesman
problem
X 1 X v Vehicle routing
xijv ≥ xij problem
|S| Heterogeneous fleet
VRP
i∈S,j6∈S i,j∈S Feeder network design
problem
Comparison
Source: O. Polat, H. Günther, O. Kulak (2014). The feeder network design problem: Application to container services in the
Black Sea region. Maritime Economics & Logistics.
I Hub ports: depot where ships start and end their route.
I Feeder ports: other ports with supply and/or demand.
AMP
Feeder network design problem
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Summary
Low level problems
Shortest path problem
Traveling salesman
problem
Vehicle routing
problem
Heterogeneous fleet
VRP
Feeder network design
problem
Comparison
Uncertainty
Operational decisions
Tactical decisions
Source: O. Polat, H. Günther, O. Kulak (2014). The feeder network design problem: Application to container services in the
Black Sea region. Maritime Economics & Logistics.
I The right hand side is the capacity of the vehicle selected to Uncertainty
Operational decisions
travel between i ∈ V and j ∈ V . Tactical decisions
AMP
Feeder network design problem
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Summary
Low level problems
! Suppose the supply si of all feeder ports i ∈ N 0 is 0 then the Shortest path problem
Traveling salesman
problem
problem reverts to a heterogeneous fleet VRP. Vehicle routing
problem
Heterogeneous fleet
VRP
X Hence, the FNDP is a generalization of the HVRP (and Feeder network design
problem
VRP and TSP), Comparison
Uncertainty
i.e., the FNDP is at least as difficult as HVRP (and VRP and Operational decisions
TSP). Tactical decisions
AMP
Comparison
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Summary
SP TSP VRP HVRP FNDP
Low level problems
# Routes 1 path 1 tour Multiple Multiple Multiple Shortest path problem
Fleet No No Homogen. Heterogen. Heterogen. Traveling salesman
problem
Pick-up/ - - Or Or And Vehicle routing
Delivery problem
Heterogeneous fleet
Solvable Virtually ±1000 ±100 ±25 ±10 VRP
# nodes unbounded Feeder network design
problem
Comparison
Uncertainty
Operational decisions
I To solve transportation problems with more nodes heuristic Tactical decisions
Uncertainty
Vehicle routing
problem
Heterogeneous fleet
VRP
Feeder network design
problem
Comparison
Uncertainty
Operational decisions
Tactical decisions
AMP
Uncertainty
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
Overview: Summary
Low level problems
Shortest path problem
Traveling salesman
I We will discuss a model with uncertain port handling times problem
Vehicle routing
and uncertain travel times. problem
Heterogeneous fleet
VRP
Feeder network design
problem
I When faced with delays there is the opportunity to increase Comparison
Source: www2.nykline.com
State space:
The set of all states is called the state space.
AMP
Operational decisions
High level problems
Transportation
problem
Transshipment
Policy: problem
Multiple commodities
A prescription of which action to take in every state is called a Summary
Goal:
I Allocate the total buffer such that the expected long term
costs of sailing the cyclic route.
AMP
Tactical decisions
Mixed integer programming formulation: High level problems
Transportation
problem
Transshipment
problem
XX Multiple commodities
Summary
min cia πia
Low level problems
i∈S a∈A Shortest path problem
XX Traveling salesman
πia = 1 (Probabilities) problem
Vehicle routing
problem
i∈S a∈A
XX X Heterogeneous fleet
VRP
pija πia = πja ∀j ∈ S (Transition) Feeder network design
problem
i∈S a∈A a∈A Comparison
XX Uncertainty
π(p,d,b),a ≤ ypb ∀p ∈ P, b ∈ B (States in use) Operational decisions
Tactical decisions
d∈D a∈A
XX
tb ypb ≤ M (Maximum buffer time)
p∈P b∈B
X
ypb = 1 (Buffer allocation)
b∈B
πia ≥ 0 ∀i ∈ S, a ∈ A
ypb ∈ {0, 1} ∀p ∈ P, b ∈ B
AMP
Tactical decisions
High level problems
Transportation
problem
Transshipment
problem
Multiple commodities
I The costs resulting from tactical decisions are determined by Summary