Decision Support For Shipping Spare Parts In Bundles

A telecommunication equipment company sends spare parts from local hubs to construction sites or other local hubs in mainland China several times a day through parcel delivery services. Depending on the delivery distance, there are various delivery options such as transportation via air, via road, via sea, via rail and via inland waterways. Many choices named service levels are available within each transportation category. There are three parcel delivery pricing policy: price per shipment, weight ranged price, and continuous pricing. Each spare parts delivery usually has a priority level or delivery time requirement. Spare parts to be shipped from the same hub or nearby hubs to the same or nearby destinations are considered being able to ship in bundles. By observing the delivery pricing structure, it is usually beneficial to bundle spare parts together for shipment. The problem is formulated as a mixed integer liner programming model. Numerical experiments are carried out to observe the benefits and also reflect the features of parcel delivery pricing structure.