Flex Serv Manuf J

DOI 10.1007/s10696-014-9201-3

Cross-docking assessment and optimization using

multi-agent co-simulation: a case study

Eun Suk Suh

 Springer Science+Business Media New York 2014

Abstract Cross-docking is an operation where incoming freights from trucks or

trains are directly loaded onto outbound trucks or trains to distributors, theoretically
eliminating the need for interim storage warehouses. It is widely used throughout
the retail industry to reduce supply chain related costs. In this paper, a cross-docking
feasibility and optimization case study, based on a simulation model framework, is
presented. The simulation model framework is created using the hybrid of discrete-
event and agent-based model, allowing accurate and customized description of
suppliers, distributors, and the cross-dock. The simulation model framework was
used to assess the feasibility of implementing cross-docking operation for a global
manufacturing firm’s technical consumer product supply chain and to optimize the
cross-docking performance within established constraints. Controllable input
parameters were evaluated for their impact to key cross-docking metrics and opti-
mized for best cross-docking operation performances. Analysis and optimization
results are presented with recommendations.

Keywords Supply chain simulation
Cross-docking
Discrete-event simulation

Agent-based simulation

1 Introduction

1.1 Motivation

Cross-docking is a ‘‘process of consolidating freight with the same destination (but

coming from several origins), with minimal handling and with little or no storage

E. S. Suh (&)
Department of Industrial Engineering, Seoul National University, 1 Gwanak-ro, Gwanak-gu,
Seoul 151-744, Korea
e-mail: essuh@snu.ac.kr

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between unloading and loading of the goods’’ (Van Belle et al. 2012). Implemen-
tation of proper cross-docking has significant advantages over traditional warehouse
approaches, such as reduction or possible elimination for material storage and order
picking, thus reducing inventory holding cost and labor cost associated with them
(Galbreth et al. 2008), making the supply chain more efficient. Wal-Mart is one of
the most prominent companies in the retail industry that implemented the cross-
docking strategy successfully (Stalk et al. 1992).
Despite the apparent advantages of cross-docking, implementation must be
preceded by careful analysis regarding the benefits and consequences of cross-
docking policy implementation. In that context, simulation model based approaches
to such analysis have gained popularity in both industry and academia, due to ease
of model creation and small amount of resource invested for conducting many
‘‘what if’’ analyses.
In this paper, a cross-docking optimization case study involving a technical
consumer products manufacturer is presented. Using the hybrid simulation model,
which consists of a discrete-event and an agent-based model, key performance
metrics for one of the major finished product unloading hub as a cross-dock was
analyzed and assessed through full factorial analysis of key independent parameters.
Key parameters are then configured to optimize the cross-docking performance.
Results of analysis and optimization are presented.

1.2 Background

A global technical consumer product company currently produces many different

kinds of product stock keeping units (SKUs). At the time of this case study initiation,
the company exercises a traditional warehouse based supply chain policy, where
incoming shipment of product SKUs are stored in warehouses throughout the country,
waiting for orders from distributors to match in-house SKU inventories. Figure 1
shows the current state of supply chain operation. In the current two-tier supply chain
structure, finished product SKUs are shipped from product suppliers around the world,
where they arrive at a docking facility. SKUs are unloaded, sorted, and are shipped to
regional warehouses, where they are stored until distributor orders arrive.
The genesis of the case study stemmed from the company management’s belief
that the elimination of the intermediate warehouse step can streamline order
fulfillment, improve the level of service, and reduce overall cost to the company and
product distributors. To achieve this end, the implementation of cross-docking
strategy was considered, where incoming shipments from product suppliers are
directly loaded into truck trailers at the dock, which are destined for distributors.
One of the key constraints is that the company would like to implement the strategy
so that the supplier’s current SKU shipment schedules and SKU order schedules for
the company and distributors remain as is. Figure 2 shows the proposed future state
of the supply chain operation, with cross-docking policy implemented.
In the proposed future state, finished product SKUs from various suppliers come
into the cross-dock, where they are unloaded, matched with orders, and loaded right
into the trailer, destined for the distributor who placed the order. Since some orders
and SKUs are expected to be unfulfilled at the cross-dock, they are rerouted to safe

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Fig. 1 Current company product supply chain

Fig. 2 Newly proposed supply chain with cross-docking implemented

valve warehouses, where distributor orders can be fulfilled and SKUs can be mated
with standing orders. The key objective of the new cross-docking policy is to
eliminate traditional warehouse inventory, while optimizing key cross-dock
performance metrics, such as the total trailer load, SKU throughput time, less than
trailer load (LTL) fill grade, and the total percentage of trucks that leaves the dock
with LTL.

1.3 Expected contribution

The cross-dock simulation framework and the case study presented in this paper are
expected to contribute in following ways. The framework proposes cross-dock
simulation, consists of discrete-event and agent-based simulation, which allow
customization of suppliers, cross-dock and distributors of products with fine
granularity. For the company, the simulation based case study offers an opportunity
to assess and optimize the expected performance of cross-docking policy prior to
actual implementation decision. The company expects to benefit from cross-docking
policy implementation through reduction of traditional warehouses, and inventory
handling steps. The proposed simulation framework will provide the company with
quantitative assessment and optimized state of new policy implementation.

2 Related research

Many research work published on the design and operations of the supply chain
utilized simulation modeling (Lendermann 2001). Cross-dock modeling belongs to

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a class of warehouse modeling, where ideally, incoming SKUs are immediately

loaded into outbound trailers with minimal handling in between, and with no excess
inventory. Cross-docking is a well-researched topic within the supply chain
management community due to its potential benefit. Van Belle et al. (2012) provide
a comprehensive overview on the past and current state of cross-docking research.
The importance of simulation modeling for cross-docking performance was
recognized early. Rohrer (1995) emphasized the importance of simulation for
testing cross-dock configuration and control systems in the virtual environment
before the solution is actually implemented. Magableh (2005) introduced a discrete
event based generic cross-docking facility model where some key cross-dock
system level performance metrics were measured using the model. Persson and
Araldi (2009) utilized discrete event simulation, combined with proposed supply
chain operations reference model, to create a supply chain simulation for Autoliv
Sverige AB, which includes cross-dock operation. Yang et al. (2010) use a discrete
event simulation based cross-dock model to conduct screening and full factorial
experiments to identify critical factors that affect forklift performance and pallet
handling time at the cross-dock. Recently, Shi et al. (2013) published work on
discrete event simulation based multi-criteria optimization of just-in-time (JIT)
cross-docking operation, utilizing various modeling methods and techniques, such
as response surface methodology and design of experiments.
While discrete event simulation is a dominant method of simulation modeling for
the supply chain, agent-based simulation is gaining attention in the community since
early 2000s. It offers freedom to describe a large number of suppliers, warehouses,
distributors and customers in an individual entity level, which is very hard to do in
traditional discrete-event simulation. It is utilized in various aspects of supply chain
modeling (Julka et al. 2002), such as supply chain configuration optimization
(Akanle and Zhang 2008), replenishment policy modeling (Bahroun et al. 2010),
collaborative supply chain planning (Hernandez et al. 2011), and route planning
(Zolfpour-Arokhlo et al. 2013) just to name a few.
Agent-based model approach has been used in warehouse modeling as well.
Maka (2011) discusses advantages of agent-based models for warehouse logistics
systems compared to traditional central management systems. Ito and Abadi (2002)
proposed agent-based modeling for warehouse systems, where three agent-based
subsystems cooperate to match orders with materials. Kim et al. (2002) use an
intelligent agent-based model to solve the order picking problem in the warehouse.
Triebig et al. (2005) apply agent-based simulation to test warehouses control
software before actual implementation. Ruiz et al. (2011) explored manufacturing
factors critical to management of warehouse using agent-based simulation. Hiel
et al. (2011) provide design decision guidelines for implementing agent-based
model when creating a warehouse management system. While literatures exist on
agent-based warehouse modeling, survey of literature regarding agent-based cross-
dock modeling yielded little results. Klumpp (2013) proposed an agent-based
decision support framework for optimizing rescheduling alternatives at the cross-
dock. It was determined that there is very few, if any, work done in cross-docking
simulation that utilizes agent-based modeling. A detailed overview of the proposed
cross-docking simulation is presented in the next section.

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3 Cross-docking simulation model overview

3.1 Model overview

The proposed cross-docking simulation describes the overall inventory flow

operation at a cross-dock. The model consists of three distinct modules, which
are explained below in detail. The simulation model was constructed using
AnylogicTM, a commercial software package capable of creating combination of
discrete-event, agent-based and system dynamic models. Figure 3 shows the overall
framework boundary for the proposed cross-docking simulation framework.
The simulation model is divided into three modules. The first module describes
the product supplier, where inflow of technical consumer product SKUs from
product suppliers are modeled using the agent-based approach. The second module
simulates the cross-docking operation, where incoming SKUs are unloaded from the
incoming trailer, matched with orders from product distributors, and are directed to
trailers which are destined for distributors that placed orders. The last module is the
agent-based outbound shipment module, where order-matched products are loaded
onto trailers destined for specific distributors, and shipped out when trailers are full,
or the waiting time reaches the specified time limit. Explanations of segments are
presented next.

3.2 Product supplier module

The product supplier module simulates incoming product inventory flow from
various product suppliers to the cross-dock. In a real situation, many SKUs
converge to the cross-dock to be unloaded, with each individual SKU having its own
unique characteristics, such as periodic demand profile and product unit volume (for
estimating maximum quantity per trailer load). In order to describe each individual
SKU flow in a more accurate manner, agent-based modeling was utilized in this
particular model segment. In the simulation, each incoming SKU is modeled as an
agent, with following characteristics.

3.2.1 Periodic SKU shipment quantity profile

Since each SKU has different demand, the supply quantity and schedule varies from
SKU to SKU. A hypothetical example of multiple SKU shipment schedule and
quantity is shown in Table 1.
In the table, each SKU has different shipment quantity per shipment period. For
the simulation, historical 1 year SKU shipment schedule and quantity was provided
for each SKU analyzed. Also, for the case study presented, a single period is equal
to a week, where the entire quantity of an SKU arrives in one single shipment.

3.2.2 Trailer fraction

Each SKU’s physical volume is different when it is packed for shipment. This will
impact the space it takes up in the standard 16 m truck trailer typically used for

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Fig. 3 Cross-docking simulation framework

Table 1 Multiple SKU shipment schedule and quantity

SKUs SKU shipment quantity by period

Period 1 Period 2 Period 3 Period 4

SKU 1 0 150 120 10

SKU 2 200 0 200 0
SKU 3 15 20 15 25

transportation. Table 2 shows a hypothetical example of several SKU’s physical

volume fraction with respect to the 16 m standard truck trailer.
Note that in the simulation, 16 m trailer is the size of the truck trailer which
SKUs are loaded and shipped to final distributors. The table also shows the
maximum quantity that a single SKU can fit in the 16 m trailer. This is an important
variable determining the fraction of the trailer that each SKU takes up in the
distributor’s truck, since there will be several different SKUs mixed within the
trailer. Using this variable, the simulation can determine the total fraction of the
trailer that is already filled, before the trailer leaves for the final destination.
In the current state, the product supplier module can handle inbound inventory
flow of up to 20 different SKUs simultaneously, with different shipment schedule,
quantities, and physical space it occupies within the outbound truck trailer.

3.3 Cross-dock module

Once SKUs from suppliers arrive at the cross-dock, they must be sorted, matched
with standing or incoming orders, and placed in a trailer, destined for the specific
distributor who placed the order. The cross-dock module is constructed using
discrete-event simulation to keep track of all SKUs status in the central location.

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Table 2 SKU volume fraction within shipment container

SKUs Volume fraction a single SKU SKU quantity that will
takes up in 16 m trailer fit in a Single 16 m trailer

SKU 1 0.0042 238

SKU 2 0.0066 150
SKU 3 0.0052 190

The cross-dock segment of the simulation model is further divided into two parts—
receiving dock and truck trailers destined for final distributors.
The receiving dock portion simulates unloading of various incoming SKUs from
different suppliers and the order matching process. Individual SKUs, in quantities
specified for a particular period, arrive at the dock from the supplier. The SKU is
then inserted into a waiting queue, where it is matched with standing order from the
distributor. The order is processed in first-in-first-out (FIFO) mode, where the SKU
is assigned to orders that have been waiting the longest. Once the SKU is mated
with the order, it then proceeds directly into the truck trailer, destined for the
distributor. Unmatched SKUs will be moved off to the safe-valve warehouse
facility, where it will wait for incoming order.
The second part is a model of truck trailer. An SKU matched with a specific
distributor’s order is moved into a truck trailer, which is destined for that specific
distributor. As the SKU enters the trailer, the fraction of physical volume the SKU
takes up within the trailer is subtracted from the trailer’s empty internal volume
fraction. Once the trailer is filled with fulfilled orders for the distributor, or if the
designated trailer waiting time is up regardless of the trailer space left, it leaves the
cross-dock for the distributor.

3.4 Distributor module

The distributor module simulates the behavior of the product distributors, who place
various SKU orders to the product manufacturers and have them delivered via truck
trailer, simulated in the cross-dock module. Each distributor has its own SKU order
profile, some ordering many SKUs and others just placing very few SKU orders.
Accordingly, this module was created using agent-based modeling. Up to 15
distributors can be modeled. The distributor module completes order-receipt
feedback loop of the cross-dock simulation, which is explained further.
When the simulation starts, each distributor places orders for SKUs that they
need. The order arrives at the cross-dock, where it is placed in the order queue. The
simulation checks to see if there is any matching SKU in the cross-dock or in the
incoming shipment that is scheduled to arrive within a designated distributor order
wait time. If neither of these conditions is met, the order is moved off to a separate
warehouse facility, where it will be fulfilled with inventory in the warehouse.
If the order and SKU are matched, the order matched SKU is placed in the truck
trailer. The simulation calculates total occupied volume fraction of the trailer and
trailer’s waiting time at the dock. When the trailer is full or the designated trailer

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waiting time is up despite the trailer is less than full, it leaves the dock and heads for
the distributor. At this point, the departure of the trailer and orders fulfilled by
contents of the trailer for the distributor are recorded and the completed order is
closed, bringing the simulation to a full circle. Integrating three modules together, a
complete cross-docking model is constructed. Next, the decision process flow for
the integrated cross-dock simulation is presented.

3.5 Cross-dock model decision process flow

The integrated cross-dock model processes incoming SKU shipments and distrib-
utor originated orders using a built-in decision process, as shown in Fig. 4. The
decision process involves distributor’s order handling, SKU shipment handling, and
truck trailer handling. Each distributor places the order for various SKUs. The order
arrives at the cross-dock, and becomes an open order. The simulation checks to see
if the SKU requested by the distributor is currently available at the cross-dock. If
they are, then the order is labeled as ‘‘match’’ and the SKU matched with order is
loaded onto the trailer. If no SKU is available on hand, the simulation checks to see
if the particular SKU in transit from the supplier is arriving at the cross-dock, before
the specified distributor order wait time expires. If there is SKU that satisfies above
condition, the order is also flagged as ‘‘match’’ and waits for the SKU to arrive.
Once the order wait time is up without being matched to a SKU, the order is then
delegated to warehouse (shown in Fig. 4), where it will be fulfilled. The inbound
SKU follow similar decision process as distributor order. If the SKU is not matched

Fig. 4 Cross-dock model decision process

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to any open order at the cross-dock within the SKU waiting time, it is also shipped
to the warehouse facility.
The last decision process involves the truck trailer, where order-matched SKUs
are loaded on. The simulation checks to see if one of two conditions is met: (1)
Trailer wait time at the dock is up or, (2) The trailer is fully loaded. Only if one or
both of the above two conditions is met, the truck trailer leaves the cross-dock.
Within the model, certain controllable parameters can be varied to conduct several
‘‘what if’’ studies for various cross-docking operation scenarios. Explanation of
input parameters and output metrics are presented next.

3.6 Parameters and output metrics

The performance of cross-docking operation depends on several factors. The cross-

dock simulation is constructed to allow variation of several independent parameters,
which can be controlled by the supply chain policy decision makers. Figure 5 shows
the Input-Process-Output (IPO) diagram for the cross-dock simulation.

3.6.1 Input parameters

• SKU wait time: When SKUs arrive at the cross-dock, they can be ‘‘temporarily’’
stored at the dock for a certain amount of time, either to be matched with an
existing or incoming order within the waiting time window, before it is shipped
out of the dock to a separate warehouse facility.
• Distributor order wait time: Just like SKUs, orders from distributors also arrive
at the cross-dock, to be matched with SKUs waiting at the dock, or wait for the
incoming shipment. Once the specified waiting time is up, the distributor order is
delegated to a separate warehouse facility, where it will be fulfilled.
• Trailer wait time: A truck trailer destined for a specific distributor, pulls up to
the cross-dock and is loaded with SKUs. In the simulation, the wait time for a
trailer can be adjusted. If the trailer fills up to its designated ‘‘full’’ fraction
within the wait time, it will depart for the distributor. If the wait time is up
before the trailer fills up, it will still depart for the distributor, with less than
trailer load (LTL).

Fig. 5 Input-process-output (IPO) diagram of the cross-dock simulation

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• Trailer ‘‘full’’ fraction: This parameter defines the threshold that the trailers
destined for distributors are considered full. For example, if the fraction is 0.8, it
means that if the trailer is filled up to 80 % (by volume) with SKUs, it is
considered a full trailer. Typically, the rest of the trailer is filled with spare parts
or consumable parts for the product. Once the trailer ‘‘full’’ fraction reaches the
threshold, the truck leaves the dock, and another empty trailer takes its place to
be loaded.

3.6.2 Output metrics

• Total number of trailers used: Throughout simulation, the model keeps track of
total number of trailers which were loaded with SKUs at the cross-dock and left
for distributors whether they were full or not.
• SKU throughput time: The amount time it takes for SKU to clear cross-dock
(leaving the dock in the trailer with matching order) from the time it arrives at
the dock. The simulation model calculates the overall average SKU throughput
time for all SKUs that came into the dock and matched with orders from
distributors. This value should be minimized to allow fast transition of SKUs
through the cross-dock.
• LTL fill grade: For all trailers leaving the dock with LTL, the trailer fill rate
should be as high as possible to allow utilization of trailer space. Simulation
model was used to maximize this value through optimization.
• Percentage of LTL trailer leaving the dock: This metrics represents the
percentage of trailers that leave the cross-dock with LTL status. Naturally, this
metric should be minimized for better trailer utilization.

In this section, details of the cross-dock model are presented, with description of
different modules, relevant parameters, and resulting output metrics. The simulation
framework is implemented in actual case study, where the feasibility of cross-
docking operation for a global product manufacturing company was assessed. The
case study is presented next.

4 Case study: cross-docking performance assessment

4.1 Case study overview and assumptions

As mentioned in Sect. 1.2, the case study consists of assessing the performance of
the newly proposed cross-docking policy of technical consumer products manu-
facturing firm. The assessment of implementing cross-docking operation is obtained
through the utilization of cross-dock simulation model. Following assumptions are
made so that the simulation results can reflect the reality within the constraints
imposed.

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• The objective of this case study is to determine optimized configuration of

policy parameters that can maximize key performances of the newly proposed
cross-docking policy, assuming current supply and demand pattern continues in
the future.
• The cross-docking simulation can simulate up to 20 SKUs simultaneously, with
each SKU represented by an agent. This capability was fully utilized as we
simulated 20 incoming SKUs and resulting performances of the cross-dock.
• The historical 1 year shipment and order profile for 20 SKUs were used for
cross-docking simulation, with a single period set to a week (7 days), giving a
total simulated period of 52 weeks. Also, incoming SKU shipment arrival
schedules are the same as it is currently for the cross-docking simulation. This
was to reflect the minimization of change requested by the management for
product SKU suppliers, despite the implementation of the cross-docking policy.
• The number of distributors was set at 15, based on discussion with the supply
chain operational staff. Distributors are modeled as agents, each with a unique
SKU order profile.
• For distributor orders, profiles of 20 SKUs are used, which coincides with the
same historical 1 year that the product suppliers shipped SKUs.
• SKU shipments from product suppliers arrive in one batch per period (week), if
there is any.
• Order data from distributors use historical 1 year order demand, corresponding
to supplier’s shipment period. Order quantities from distributors are divided into
a week segment, where a specific number of SKUs are requested by each
distributor. Within each period (week), a fixed number of orders arrive in
random intervals, reflecting reality of customer orders at uncertain times.
• It was assumed that all orders that do not match with SKUs at the cross-dock can
be fulfilled out of the off-site warehouse, and are delegated to the warehouse
after the order wait time is up, as shown in Fig. 4.
• Each distributor has its own dedicated truck trailer to be filled, not sharing it
with other distributors. Also, if the specified trailer wait time at the cross-dock
exceeds set wait time, the truck trailer departs for the distributor with less than
full load.
• Initial warm-up time for the simulation was zero, and when the simulation starts,
the cross-dock starts with zero SKU inventory. It was determined that the
inclusion of warm-up phase did not impact total cross-dock performance in any
significant way.

For the simulation, system level constants and range of input parameters are set.
Table 3 shows system level constants and Table 4 shows the value ranges of input
parameters used for this simulation case study. In Table 4, the reference value refers
to wait times and trailer ‘‘full’’ fraction that the supply chain planning staff initially
agreed on to be the standard value.
The range of input values for input parameters were decided after discussion with
the company’s supply chain operation staff, who felt the wait times specified are
reasonable. In some cases, the cross-dock becomes a temporary ‘‘warehouse’’ for

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SKUs with no matching orders. In that same note, the truck trailer, destined for a
specific distributor, can become a ‘‘warehouse’’ while waiting for it to be filled to
full capacity. High upper value ranges for wait times for SKU, distributor order, and
trailer means that it negates the purpose of the cross-dock. However, after
discussion among the task force team, high upper value ranges for the wait times
were included for the simulation to observe sensitivities of output metrics for
general assessment of cross-docking policy effectiveness.
For each input parameter, the reference value represents wait times and trailer
fraction that the supply chain operation staff felt would be standard for the actual
cross docking operation. It was agreed among the team that a week of waiting time
would be realistic in case the cross docking policy is implemented. Resulting output
metric using these reference value was used as reference output metric value when
performing ‘‘what if’’ analysis.
For the case study, top 20 SKUs, by distributor order and supplier shipment
quantities, were selected. The reason for this selection was to test the maximum
performance limit for cross-docking operation using high volume SKUs. For each
simulation run, input parameter values shown in Table 4 were used, while system
level constants stay fixed. With combination of all input parameter values
(5 9 5 9 5 9 4 = 500), total of 500 simulation run was performed. Results of
simulations and analysis are presented in the next section.

4.2 Cross-dock simulation results and analysis

Tables 5 through 8 shows partial results of cross-docking simulation results.

Table 5 shows key performance metric values as SKU wait time changes. Table 6
shows key performance metric values as function of distributor order wait time.
Table 7 shows key performance metric values as function of trailer wait time.
Finally, Table 8 shows key performance metric values as function of trailer ‘‘full’’
fraction. For parameter values not shown in each table, they are set to reference
values shown in Table 4.
As the SKU wait time increases, the total trailer load shipped out increased. This
is due to increased number of matching orders and SKUs, since SKUs stays at the
cross-dock for longer period of time. SKU throughput time increases as SKU wait
time becomes longer. However, LTL fill grade seem to peak at SKU wait time of
11 days. Finally, since more orders and SKUs are matched, it increases the number

Table 3 System level constants

System level constant Value

Simulation time 1 year

Length of a period Week (7 days)
Number of SKUs 20 SKUs
Number of distributors 15 distributors
SKU shipment and distributor order profile Historical 1 year profile

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Table 4 Input parameter values

Input parameter Units Input values Reference value

SKU wait time Days 3, 7, 11, 15, 19 7

Distributor order wait time Days 3, 7, 11, 15, 19 7
Trailer wait time Days 3, 7, 11, 15, 19 7
Trailer ‘‘full’’ fraction Fraction 0.7, 0.8, 0.9, 1.0 0.8

of trailers that leave the dock with full cargo, resulting in reduction of LTL
percentage.
As distributor order wait time increases, the number of trailer used also increases,
due to same reason that the SKU wait time increased total number of trailer used.
However, increased distributor order wait time speeds up the SKU throughput. This
is due to the fact that longer order waiting time means more order accumulation, and
when the SKU shipment arrives at the dock, they are quickly matched and packed
into the trailer, which fills up quickly and leaves the dock. Increasing distributor
order wait time also has positive impact on LTL percentage, as number of trailer
leaving the dock with LTL decreases. However, the LTL fill grade doesn’t seem to
correlate to the distributor order wait time very well.
Trailer wait time has great impact on several performance metrics. When the
trailer wait time is 3 days, the total number of trailer trucks used is significant. This
decreases by almost half as the wait time is increased to 7 days. However, further
increasing the trailer wait time does not results in same rate of reduction for the total
number of trailers used. Trailer wait time has moderate impact on SKU throughput
time and LTL fill grade. Finally, the LTL percentage is very sensitive to the trailer
wait time, showing significant reduction as the trailer wait time increases.
Finally, the trailer ‘‘full’’ fraction affects key metrics in interesting ways. As the
defined trailer ‘‘full’’ fraction increases, total number of trailers used decreased. This is
due to the fact that all trailers spent more time at the dock for longer period of time as
the fraction increased, waiting for trailer to be filled. SKU throughput time didn’t seem
to be affected by the trailer ‘‘full’’ fraction. However, increasing the threshold on full
trailer criteria had positive impact on LTL fill grade. As trailer is waiting to be filled up
to increased threshold, the filled portion of the LTL trucks also increased. Lastly,
increasing the trailer ‘‘full’’ fraction increased number of trailer trucks labeled ‘‘LTL’’
since the bar for qualifying to be a ‘‘full’’ trailer is increased.

4.3 Cross-dock performance optimization

Using the model created, optimizations of key cross-dock performance metrics were
performed. Input parameter ranges were between minimum and maximum values
shown in Table 4, with SKU wait time, distributor wait time and Trailer wait time
are allowed to vary in increment of 1 day. The following five cases were evaluated
and Table 9 shows optimized cross-docking parameter values and performance
metric values for all five cases.

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• Case 1: Cross-docking parameters were optimized for total number of trailers

used (minimize).
• Case 2: Cross-docking parameters were optimized for SKU throughput time
(minimize).
• Case 3: Cross-docking parameters were optimized for LTL fill grade
(maximize).
• Case 4: Cross-docking parameters were optimized for Percentage of LTL trailer
leaving the dock (minimize).
• Case 5: Multi-objective optimization of four performance metrics, with equal
weight given to each metric.

Interesting observations can be made for each optimized case. For case 1, to
minimize the number of trailer trucks used, SKU wait time and the distributor order
wait time was set to 3 days, which is the lower boundary of the parameter values.
Setting these values at minimum allows SKUs and distributor orders to be delegated
to other warehouses, decreasing actual amount of order matched SKUs shipped via
distributor bound trailer trucks. Trailer ‘‘full’’ fraction was set to 1.0 and the trailer
wait time was set at the maximum value, forcing trailer trucks to stay longer at the
dock to take more SKUs, thus resulting in overall reduction of trailer trucks used.
Case 2 minimized the SKU throughput time by minimizing SKU wait time, the
trailer wait time, and the trailer ‘‘full’’ fraction, while stacking distributor orders at
the dock by setting the distributor order wait time to the maximum value. This
setting allows order matched SKUs to move off the dock quickly through short wait
time for SKUs and trailers, while stacking distributor orders by maximizing the wait
time to increase the SKU and order matching probability and amount. Also, the
threshold for ‘‘full’’ trailer is set to minimum, allowing the trailer to depart for the
distributor faster. However, the fastest SKU throughput time is achieved at the cost
of very high number of trailers used, low cargo space utilization rate of LTL trailers,
and high percentage of trucks leaving the dock with LTL.
Case 3 optimized LTL fill grade. For trucks that left the cross-dock with LTL, the
average cargo space utilization rate was 63.6 %. This was primarily achieved by
setting relatively long distributor order wait time and trailer wait time, while raising
the trailer ‘‘full’’ fraction threshold to the maximum. This setting allows increased
number of order matched SKUs trying to fill the distributor bound trailers, while
trailers wait until they are, on average, fully packed, raising cargo utilization rate in
general even if they leave with LTL. Observing values of other key metrics show
that this setting can achieve balanced level of performance across the board.
Case 4 is the case where the percentage of LTL trailers was minimized. This was
achieved through setting all waiting times to maximum values, while minimizing
the threshold level of ‘‘full’’ trailer fraction. High number of trailer trucks is used,
while SKU throughput time also increased to minimize the LTL trailer percentages.
The final case shows optimization results for all four objectives considered in
equal capacity. Compared to four optimization results that optimized individual
performance metrics, results of this optimization showed balanced performance
metric values.

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Table 5 Cross-docking metric values as function of SKU wait time (distributor wait time = 7 days,
trailer wait time = 7 days, trailer fraction = 0.8)
SKU wait time Total number SKU throughput LTL fill Percentage of LTL trailer
(days) of trailers used time (days) grade (%) leaving the dock (%)

3 128 2.9 35.0 63.3

7 144 4.2 37.8 56.9
11 156 6.8 39.5 50.6
15 166 9.1 37.4 43.4
19 174 11.4 37.6 40.2

Table 6 Cross-docking metric values as function of distributor order wait time (SKU wait time = 7
days, trailer wait time = 7 days, trailer fraction = 0.8)
Distributor order Total number of SKU throughput LTL fill Percentage of LTL trailer
wait time (days) trailers used time (days) grade (%) leaving the dock (%)

3 133 5.4 33.6 66.9

7 144 4.2 37.8 56.9
11 154 3.8 39.3 48.7
15 164 3.6 37.9 40.9
19 174 3.3 42.0 38.5

Table 7 Cross-docking metric values as function of trailer wait time (SKU wait time = 7 days,
distributor order wait time = 7 days, trailer fraction = 0.8)
Trailer wait Total number of SKU throughput LTL fill Percentage of LTL trailer
time (days) trailers used time (days) grade (%) leaving the dock (%)

3 263 3.3 25.0 89.7

7 144 4.2 37.8 56.9
11 123 5.1 39.5 35.8
15 110 5.8 47.8 20.9
19 108 6.1 41.1 13.9

To further interrogate the result of Case 5, two different Monte Carlo simulations
were performed. The first Monte Carlo simulation varied input parameters under the
assumption that the total average wait times and trailer ‘‘full’’ fractions for all
suppliers and distributors vary. Based on 500 full factorial simulation runs, a
regression model for each performance metric was obtained. Using the regression
model, Monte Carlo Simulation was performed with parameter settings shown in
Table 10. Parameter values were chosen with the assumption that once the reference
values for wait times are set in the company, they can typically vary 1 or 2 days
within their tolerances. As for the trailer full fraction, same reasoning was applied.
Results of 100,000 simulation runs are shown in Fig. 6.
With varying wait times and trailer ‘‘full’’ fraction criteria within the range
specified in Table 10, four performance metrics for cross-docking operation vary as

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Table 8 Cross-docking metric values as function of trailer fraction (SKU wait time = 7 days, distributor
order wait time = 7 days, trailer wait time = 7 days)
Trailer ‘‘full’’ Total number of SKU throughput LTL fill Percentage of LTL trailer
fraction trailers used time (days) grade (%) leaving the dock (%)

0.7 157 4.3 31.4 48.4

0.8 144 4.2 37.8 56.9
0.9 135 4.4 39.6 60.0
1.0 131 4.7 42.8 67.2

Table 9 Cross-docking performance optimization results

Parameters and metrics Case 1 Case 2 Case 3 Case 4 Case 5

Parameters
SKU wait time 3 3 3 19 3
Distributor order wait time 3 19 11 19 19
Trailer wait time 19 3 15 19 16
Trailer ‘‘full’’ fraction 1.0 0.7 1.0 0.7 1.0
Performance metrics
Total number of trailers used 62 295 94 188 116
SKU throughput time (days) 7.6 1.4 4.5 8.9 3.8
LTL fill grade 48.3 % 19.9 % 63.6 % 43.1 % 60.8 %
Percentage of LTL trailers leaving the dock 46.8 % 66.8 % 30.9 % 5.3 % 18.1 %

Bold values indicate optimized performance metric value for each of first four case studies

Table 10 Monte carlo simulation settings for case 5 (parameter variation)

Parameters Range Distribution

SKU wait time 3–5 Uniform

Distributor order wait time 17–19 Uniform
Trailer wait time 15–17 Uniform
Trailer ‘‘full’’ fraction 0.9–1.0 Uniform

shown in Fig. 6. With the exception of LTL fill grade, all metrics showed normal
distributions with relatively tight standard deviations. LTL fill grade showed
uniform distribution, also with relatively small variation.
For the second Monte Carlo simulation, demands from individual distributors
were varied ±10 % from their historical demands. The variation was based on
supply chain management team’s input regarding variation of demands under
normal operating conditions. For the second Monte Carlo simulation, Anylogic’s
simulation was used, not the surrogate regression model. The regression model
assumes that distributor’s periodic demands are equal to historic demands, thus not
able to approximate cross-dock performance metric values under uncertain demand.

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Fig. 6 Monte Carlo simulation results for case 5 (parameter variation)

Table 11 Monte carlo simulation results for case 5 (demand variation ± 10 %)

Cross-dock performance metrics Mean SD

Total number of trailers 115 0.53

SKU throughput (days) 3.9 0.14
LTL fill grade 61.6 % 1.9 %
Percentage of LTL trailers 19.9 % 0.7 %

However, due to long computation time for Anylogic Monte Carlo simulation
(*15,000 s for 200 simulation runs, compared to 150 s for 100,000 simulation runs
with regression model based Monte Carlo simulation runs), 200 simulation runs are
made. Parameter values, shown in Table 9 for Case 5, were used. Results of the
simulation are shown in Table 11.
The results show that the cross-dock strategy can perform close to the optimal
setting when subjected to normal demand variation, with very tight standard
deviation. With analysis and optimization results provided in this section, decision
makers can make informed decision regarding cross-docking policy implementation
and key parameter configurations.

5 Conclusion

In this paper, a hybrid of discrete-event and agent-based simulation model

framework for a cross-dock is introduced. The simulation model is capable of
modeling and customizing individual product supplier and distributor in terms of
SKUs quantities, shipment intervals, customer order profiles and SKUs ordered,

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using the agent-based model, while the cross dock itself is modeled as a discrete-
event model. The simulation model framework was utilized to analyze and optimize
key performance metrics for proposed cross-docking operation of a major technical
consumer product manufacturer.
In the case study, a global product manufacturer’s proposed cross-docking
operation was modeled using the simulation framework introduced. Using range of
input parameters that can be controlled by the policy makers, a set of full factorial
simulation run was conducted to yield critical cross-dock performance metrics.
Results of simulation runs, subsequent sensitivity analysis, optimization and Monte
Carlo simulation provided policy decision makers with quantitative impact of each
input parameter, allowing them to tune the proposed cross-docking policy parameter
configuration.

Acknowledgments This work was supported by the Research Settlement Fund for the new faculty of
Seoul National University.

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Dr. Eun Suk Suh is Assistant Professor of Industrial Engineering at the Seoul National University in
Korea. His research focuses on the complex system properties, system design methodologies and analysis,
complex technology infusion, and system lifecycle analysis. His previous industrial experience includes
his tenure at Xerox Corporation as a research scientist and working as a chassis design engineer at
Hyundai Motor Company’s Commercial Vehicle Development Division. He earned a PhD in Engineering
Systems from MIT, a Masters of Engineering degree in Mechanical Engineering from the Cornell
University and BS in Mechanical Engineering from the Clarkson University. Dr. Suh currently holds
numerous international patents, and is author of numerous academic publications.

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