An approximate dynamic programming approach to urban freight distribution with batch arrivals

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Abstract

We study a dispatch problem with uncontrolled batch arrivals of LTL orders at an urban consolidation center. These arrivals re ect the delivery of goods by independent carriers. The speci c order properties (e.g., destination, size, delivery window) may be highly varying in city logistics, and directly distributing an incoming batch may yield high costs. Instead, the hub operator may decide to wait for incoming batches that allow for more e cient distribution. A waiting policy is required to decide which orders to ship and which orders to hold. We model the dispatching problem as a Markov decision problem. Dynamic Programming (DP) is applied to solve toy-sized instances. To solve realistic instances, we propose an Approximate Dynamic Programming (ADP) approach. Through numerical experiments, we show that the ADP approach closely approximates the optimal values of DP for small instances, and outperforms two benchmark policies for larger instances
Original languageEnglish
Place of PublicationEindhoven
PublisherBETA Research School for Operations Management and Logistics
Number of pages25
Publication statusPublished - 2015

Publication series

NameBETA working paper
PublisherBeta, Research School for Operations Management and Logistics
No.474

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  • Cite this

    van Heeswijk, W., Mes, M., & Schutten, M. (2015). An approximate dynamic programming approach to urban freight distribution with batch arrivals. (BETA working paper; No. 474). Eindhoven: BETA Research School for Operations Management and Logistics.