Truck milk runs

The consolidation center is not used for every item. Indeed, suppliers deliver directly all the items other than those explicitly identifed for the consolidation center. Returnable containers with item-specific dunnage are used for local deliveries on milk runs because (1) they save assembler time and disposal costs, (2) their number caps the amount of parts in circulation, and (3) the trucks that ride back to the supplier plant would otherwise be empty. The economics of returnable containers become less favorable for distant suppliers, whose remote or overseas locations may provide opportunities for return freight. 

Now, we analyze the network in which suppliers run mUk runs to retail stores. Milk runs increase the transportation cost but decrease the level of inventory each store has to hold. We provide a detailed analysis for the instance of suppliers running milk runs to two stores on each truck. In this case, we have the following ... 

Batch size shipped from each supplier to each store = 40,000/2 = 20,000 units Number of shipments/year from each supplier to each store = 960,000/20,000 = 48 Transportation cost per shipment per store (two stores/truck) = 1,000/2 + 100 = 6(X) Annual trucking cost for milk run network = 48 X 600 X 4 X 8 = 921,6(X)... 

Run milk runs from each supplier to multiple stores in Illinois to lower inventory cost even if the cost of transportation increased. Large trucks (capacity of... 

Run milk runs using small trucks (capacity of 10,000 units) from each supplier to multiple stores in Arizona. The small truck carrier charged 2,000 per shipment and 50 per delivery. Thus, a milk run from a supplier to four stores would cost 2,200. Milk runs would incur higher transportation costs than direct shipping but would keep inventory costs lower. 

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