Cost-Based Optimization of Shipment Scheduling

Major suppliers and importers ship their products from many parts of the world, Products are typically packaged and loaded into containers at their points of origin, transported to a local port and shipped to a destination port where the containers will be unloaded and moved to their designated warehouses. We construct a nonlinear optimization model that minimizes the end-to-end cost of this transportation operation. A major shipper often has contracts with several carriers, each maintains a different voyage schedule and a different cost structure for shipping the containers. Containers arriving at their destination terminal are usually kept in the terminal a number of days before they are moved away either by trucks or by rail. Terminals typically allow free container dwell time up to a limit, beyond which demurrage charge will be imposed. The limit for free storage differs from one terminal to another and may even be different from one customer to another. How fast can a shipper move containers out of the terminal depends on warehouse capacity and truck availability that the shipper has contracted for the transport service. Based on these constraints, we want to find an optimal way to ship the containers from the point of origins to the warehouse destination. The optimality is in terms of end to end cost.