Dynamic approach to strategic and operational multimodal routing decisions

By adopting multimodal logistics, global firms can significantly reduce lead time and inventory carrying costs, which may constitute major improvements in both profit and customer service. This paper presents dynamic programming formulations of multimodal logistics systems, which result in deterministic acyclic networks that may be solved using Dijkstra's algorithm. Using these models one can find both a least cost route and a least lead time route subjected to lead time and total cost, respectively. By combining these models, they may be used to make strategic decisions and to allow for system control in response to disruption. The presented model has both the analytical foundation and flexibility for application to a number of situations.