Vehicle capacity planning system: a case study on vehicle routing problem with time windows

In this paper, we consider a local logistic company that provides transportation service for moving empty and laden containers within Singapore. Due to the limited capacity of its own fleet of vehicles, the company cannot handle all the job orders and have to outsource some orders to other smaller local transportation companies. The current operation of assigning jobs for outsourcing goes through two steps. In the first step, a certain percentage of jobs will be preselected for outsourcing according to some simple rules. Then at the second step, the rest of the jobs will be put into an in-house computer system which assigns jobs to its internal fleet of vehicles according to some greedy rules and the remaining jobs that cannot be served by the internal fleet of vehicles will be outsourced. This paper presents a vehicle capacity planning system (VCPS), which models the problem as a vehicle routing problem with time window constraints (VRPTW) and tabu search (TS) is applied to find a solution for the problem. From the simulation results, some new rules on how to assign jobs for outsourcing are derived, which are shown to be about 8% better than existing rules currently adopted by the company.