IMPORTANCE OF TRANSPORTATION / VEHICLE ROUTING

In today's business world, transportation cost typically constitutes more than half of the total logistics costs. This share has experienced a steady increase, since

• smaller,
• faster,
• more frequent,
• more on time shipments

are required as a result of trends such as

• increased variability in consumer's demands,
• quest for total quality management,
• near-zero inventory production and distribution systems,
• sharp global-size competition

The benefits that may be achieved by reducing the transportation costs is of interest to the business at the micro level, and to the country at the macro level. For example, an estimate by the National Council of Physical Distribution Study shows that transportation accounted for 15% of the U.S. gross national product in 1978. It should come as no surprise that many people in business and researchers in management science and operations research have shown great interest to the transportation aspect of the logistics activities is no surprise.

Decreasing transportation costs can be achieved through better utilization of resources such as people, vehicles. The interest of this section is to expose the reader to some of the issues related with utilizing vehicles more efficiently. One of the most important steps involved in utilizing vehicles efficiently is performing an efficient routing of a fleet of vehicles when they are to pickup/deliver passengers or goods from/to certain points.