LTL Mode Discount from Published Tariff

The challenge inherent in developing models of freight rates from publicly available data is that many, if not most, carrier-shipper transactions are governed by privately established contracts, which specify the actual prices charged for carrier services. The value of access to public data like the CzarLite tables available on-line, however, is that they often serve as the basis from which LTL rates are negotiated in carrier-shipper contracts. Commonly, a carrier will quote a shipper a discount from the nominal rates stated in a CzarLite-based rate tariff. Denoting this discount factor by (0 1—i.e., a discount of (1 - 8, ) x 100% off the published rate), the 

we can state an LTL-specific version of our total annual cost function for inventory decision making, namely 

Using the problem data we introduced in Example 4.2, let us now consider LTL shipments from Oakland to Atlanta as an alternative to TL shipments. We do this merely as an exercise in demonstrating how the computations are structured, since we can immediately presume—from the fact that the Q Qmaxji constraint in Example 4.3 was tight in the optimal solution to the TL optimization—that it is quite unlikely that LTL shipments will be economically justified. One issue to point out here 

Additional information for formulating this problem is the LTL rate function (wQ) = 4.115 a 07W2Q-a2058 from Example 4.8 given 

as we discussed earlier, since a total of D units will be shipped across the year-long horizon for which we state our objective function TAC, the estimated annual transportation cost will be 

---