# ISE 754 HW 6: Freight Transport solution

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Solve questions 1 and 4 by hand (you can submit a scanned copy of your solution, or you can
just turn in a paper copy in class) and then, for questions 2, 3, 5, and 6 create a script in Matlab
that performs the calculations needed to answer each question, one cell for each part of each
question. Please submit your script and either diary or “published” output file via Moodle.
1. What is the difference in the transport charge to ship 25 cartons of a product LTL from
Raleigh to Gainesville using the undiscounted tariff given below as compared to using
the LTL rate estimation formula with a PPI of 144.3? Each carton weighs 70 pounds and
occupies twenty cubic feet.
2. On average, 75 tons of a product are shipped 625 miles from your manufacturing plant to
your DC each year. The product is produced and consumed at a constant rate throughout
the year. Currently, the product is shipped using independent P2P truckloads. What
would be the impact on total annual logistics costs if the average interval between
shipments was restricted to not exceeding one week and, if the shipment size is equal to
one week’s demand, then both TL and LTL are considered? The PPIs for TL and LTL are
2
123.4 and 141.4, respectively; a truck’s cubic and weight capacities are 2,750 ft3
and 25
tons, respectively; each ton of the product is valued at \$11,200; its density of 12 lb per
ft3
; the inventory carrying rate is 40%; and in-transit inventory costs can be ignored.
3. On average, 1000 and 1200 units of components A and B are shipped 500 miles from
your fabrication plant to your assembly plant each year. The components are produced in
batches just prior to shipping and are consumed at a constant rate throughout the year.
Currently, each component is shipped using separate P2P truckloads. What would be the
impact on total annual logistics costs if the components are instead combined into P2P
truckloads? The revenue per loaded truck-mile is \$2.00; a truck’s cubic and weight
capacities are 2,750 ft3
and 25 tons, respectively; each unit of A and B is valued at \$35
and \$40, respectively, weighs 24 and 40 lb, respectively, occupies 10 and 4 ft3
,
respectively, and loses 70% of its original value after two and three years, respectively;
the interest and warehousing carrying rates are 4% and 6%, respectively; and in-transit
inventory costs can be ignored.
4. It is expected that 400 and 120 tons of products A and B, respectively, will be shipped
each year from your DC to five customers located in Asheville, Winston-Salem,
Greensboro, Durham, and Raleigh, with each customer receiving 20, 25, 30, 15, and 10
percent of the total demand, respectively. Full P2P truckloads of A and B will be shipped
FOB origin to the DC from suppliers located in Statesville and Wilmington, respectively,
and full P2P truckloads containing a mix of both products will be shipped FOB
destination to each customer. Each carton of A and B weighs 100 and 50 lb, respectively,
and occupies 25 and 5 ft3
, respectively. Each truck’s cubic and weight capacity is 2,750
ft3
and 25 tons, respectively. Assuming that I-40 will be used for all travel (see figure,
above), where should the DC be located in order to minimize transportation costs?

-83 -82 -81 -80 -79 -78
34
34.5
35
35.5
36
36.5
Asheville
Statesville
Winston-Salem Greensboro
Durham
Raleigh
Wilmington50
150
190 220
270
295
420
40
3
5. A product will be produced at a single plant and 1200, 3200, 2200, 1100, 1600, and 1500
units per year will be sent to customers located in ZIP codes 72118, 55472, 15010,
88102, 87301, and 73099, respectively. Each unit of the product weighs 175 lb, occupies
38.2 ft3
, and requires 4, 3, 1, and 4 units of raw material from suppliers located in
Richmond, CA, Canton, OH, Malden, MA, and Tyler, TX, respectively. Each unit of raw
material weighs 8, 14, 4, and 29 lb, and occupies 2.7, 1.3, 2.7, and 3.6 ft3
, respectively.
Assuming all transport is P2P FTL, determine the city with a population of at least
50,000 in which the plant should be located.
6. iChain, Inc., has just purchased a DC that is located in Durham, NC to serve its retail
facilities located in VA, NC, and SC. The DC will receive product from suppliers located
throughout the U.S. Independent P2P TL or LTL will be used for all transport, and
product is consumed at a constant rate at all of the retail facilities. Determine the
transshipment policy that iChain should use to operate the DC, where you should decide
if all products should be stocked with no coordination or should all be cross-docked using
a single shipment interval. The worksheet Supplier of the spreadsheet HW6data.xlsx (see
Course Schedule for data link) lists the Zip code (zip), volume (cu, ft3
), weight (wt, lb),
cost (uc, \$), and salvage value after one year (sv, \$) of each unit of 64 different products.
The worksheet Customer lists the Zip code (zip) of each of the 28 retail facilities, and the
worksheet Demand lists annual unit demand of each product for each retail facility.