Empirical Evaluation of Economic Order Quantity Model for Choice of Shipment Size in Freight Transport

Abstract

Deciding shipment size is important in freight transport: it depends on the logistical imperatives of shippers and the technical possibilities of carriers. Shipment size choice is also closely related to transportation mode; it is therefore important from a public policy perspective. The theory of optimal shipment size and mode choice is robust. There are many inventory-theoretical models of optimal shipment size, applied by shippers in operational contexts. However, none of them has been validated empirically over a large and heterogeneous population of shipments, so that they are virtually useless for modeling freight transportation demand. This is due in particular to the lack of adequate data. In this paper, the simple Economic Order Quantity (EOQ) model is assessed empirically on a national scale, over a heterogeneous population of shipments. Using the French ECHO database, which notably observes commodity flow rates between shippers and receivers, the EOQ shipment size specification is estimated. The validity of the EOQ model is confirmed. In addition, the dominant role of the commodity flow rate between the shipper and the receiver, and of commodity value density is revealed. The relationship between mode choice and shipment size is also highlighted.

Freight Generation and Freight Trip Generation Models

“…Therefore, a four-time increase in FG will result only in the doubling of the FTG. It is important to mention that the EOQ model provides a good estimate of the shipment sizes observed in real life (see Combes (2012) and Chapter 5 of this volume). Moreover, it is expected that modes or vehicle types with high set-up and transport costs will be used to transport larger shipments less frequently.…”

An inventory-based simulation model for annual-to-daily temporal freight assignment

“…Burns et al, 1985;Rieksts and Ventura, 2008) as well as applications for a population of firms assumed to follow the EOQ approach (Combes, 2012;Windisch et al, 2010). In the latter, EOQ represents a relationship between transport cost and inventory cost to estimate a cost function that jointly considers mode choice and shipment size.…”

Modelo para análise ex ante de políticas de logística urbana baseadas em centros de distribuição urbanos: uma abordagem utilizando dinâmica de sistemas

“…Os gráficos a seguir representam o comportamento da velocidade média em função da densidade de tráfego: a Figura 3 mostra os valores calculados pelo modelo, e a Figura 4, os apresentados na literatura por Geroliminis & Daganzo (2007). Segundo ciclo: gestão de estoque e distribuição O segundo ciclo (Figura 5) descreve a resposta do setor privado ao congestionamento: como a velocidade média diminui, o custo de transporte total aumenta em razão de mais consumo de combustível e mais tempo necessário para entregas; logo, de acordo com o modelo do lote econômico (EOQ, da sigla em inglês Economic Order Quantity), a reação racional das empresas seria aumentar o tamanho do lote mínimo de cada entrega (Combes, 2014), o que, por sua vez, aumentaria a utilização de veículos pesados (ou equivalentemente diminuiria a percentagem de veículos leves) e aumentaria a correspondente capacidade média dos caminhões.…”