Direct versus terminal freight routing on a network with concave costs

Randolph W. Hall

Transportation Research Part B: Methodological, 1987, vol. 21, issue 4, 287-298

Abstract: This paper develops a procedure for deciding whether to route a shipment through an intermediate transportation terminal or route it directly to its destination. The procedure applies to networks with many origins (e.g. 2000) and few destinations (e.g. 20, or vice versa), where each origin is served by exactly one terminal. This decision is difficult because of economies-to-scale in transportation, which cause the cost of routing a shipment through a terminal to depend on the routes chosen for other shipments. The optimization procedure developed here finds the optimal routes graphically with a one-dimensional search, and is sufficiently efficient to be programmed on a hand calculator or personal computer. The procedure also provides insights as to the sensitivity of the optimal solution to changes in model parameters.

Date: 1987
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