A Freight Transportation Network Model with a New Bundling Option

Abstract

A bundling option in a freight transportation network model enables a certain amount of goods to be sent after grouping them into a bundle. Usually, each bundle occupies the space of a unit good and/or can be transshipped using a more economical transportation mode, which results in reduced transportation costs and carbon emissions. As bundling and unbundling also incur costs, it is important to use the bundling option in an economical way. Several freight transportation network models were developed to find an optimal bundling strategy that minimizes the total cost. The existing models assume that bundling and unbundling can be performed at all nodes, including transshipping nodes. However, in many applications, goods are bundled at the supply node and are not unbundled until they arrive at the demand node. A new model, proposed herein, allows bundling only at the supply nodes and unbundling at the demand nodes. We investigated the complexity of the new model and developed a solution method. Furthermore, we analyzed how the total cost is affected by the new assumption.