Fleet Size Planning When Outside Carrier Services are Available.

The delivery of goods from a warehouse to local customers is a critical aspect of a material logistics system. A strategic decision must be made periodically (e.g., once a year) whether to maintain a private delivery fleet, to employ outside commercial services or to use a combination of both options. The model considers a geographic area, comprised of various sectors with random daily demands, served by a single warehouse. The costs considered include the fixed and variable (per mile) costs of a private vehicle and the outside carriers' delivery charges. A private vehicle is constrained by the length of the work- day, since it returns to the warehouse only after completing all its assignments. The model determines the private fleet size and the specific assignment of each sector to a private vehicle or to an outside carrier.