Menlo Worldwide Forwarding Optimizes Its Network Routing

Abstract

Since 2000, Menlo Worldwide Forwarding (formerly Emery Worldwide) has faced a particularly challenging business environment that has been exacerbated by a weakened economy, the events of September 11, and a decreasing demand for airfreight. To meet these challenges, the company and Menlo Worldwide Technologies developed a network-routing-optimization model to optimize Menlo Worldwide Forwarding$s North American transportation network. The project team and senior managers have repeatedly identified and applied low cost solutions to meet the changing and complex network-routing requirements. By maximizing its use of network capacity, the company has increased profitability and reduced operating costs while maintaining high service levels. In 2002 alone, Menlo Worldwide Forwarding reduced operating costs by 21 percent, increased operating margin by 41 percent, and improved financial results by $80 million in the North American aircraft transportation operation. Moreover, management used the optimization model to facilitate Menlo$s transition from a heavily asset-based, integrated airfreight company to an asset-light, freight-forwarding business. This created a flexible operating environment and a competitive advantage for future operations.

Inventory financing in supply chains

“…The sharp rise in the beginning is due to the fact that several expenditures occur independent of the financed amount of goods. Supply chains, for instance are characterized by high-levels of fixed costs as Prior et al (2004) explains. Furthermore, the slope of the curve is influenced by the type of financed goods.…”

Single-Leg Air-Cargo Revenue Management

“…Moussawi and Çakanyildirim (2005) and Luo and Çakanyildirim (2005) develop two-dimensional overbooking models, but do not consider a dynamic booking control problem as we do. Mathematical models for network routing optimization can be found in Prior, Slavens, and Trimarco (2004) and Bartodziej and Derigs (2004). These papers focus on optimizing aircraft scheduling and routing in the network, given a set of fixed accepted requests.…”

Designing large-scale supply chain linear programs in spreadsheets

“…As a result, supply chain LP models have become one of the most common LPs being solved. Table 1 shows some of the organizations that have used spreadsheet-based optimization models [3]; see [4][5][6] for descriptions of other applications of LP for supply chain management. Because of this increasing use, the ability to design an optimization model within a spreadsheet is important.…”