Role of Mathematical Modelling in Transportation Sciences

A logistics network consists of suppliers, manufacturing centres, warehouses, distribution centres, and retail outlets as well as channels for the flow of raw materials, work-in-process inventory, and finished products between the facilities. In many cases, the problems of each logistics functions are treated as isolated functions. There are network design; information flow; transportation; inventory; and warehousing, material handling, and packaging. Whereas, the basis of performance improvement in integrated logistics network is total cost analysis. That is minimising the total cost of transportation, warehousing, order processing and information, lot quantity, and inventory carrying cost. In this paper, we consider an integrated logistics problem in minimising the total logistics cost and provide model for logistics network optimisation in form of a mathematical programming model. To solve a cost optimisation problem in those problem both production and distribution cost are significant and inter-related. An integrated model of logistics network minimises total physical distribution costs by simultaneously determining optimal plants and warehouse locations, flows in the resulting network, shipment compositions and shipment frequencies in the network using heuristics methodology. The objective is to optimise the production and distribution plan so as to minimise its total logistics cost.