Real Time Optimization of

Shipping Routes
Route optimization
 Process of determining the most cost-
efficient route.

 Relevant factors involved : 

 Number and location of all stops on the

route.
 Arrival/departure time gap.
 Effective loading.

 Route optimization is a solution for so-

called vehicle routing problems (VRPs)
 Importance of Route
Optimization
 Improve Fuel Efficiency to Save Money

 Save Time

 Enhance Customer Satisfaction

 Get better On-Time Performance Rate

HOW DOES IT WORK?

Route optimization uses analytics and computer algorithms
to identify the most efficient delivery route possible based
on such variables:

 Traffic congestion
 Distance
 Turns and intersections
 Closest drivers
 Various Operations in Shipping Routes
Route optimization enables operational efficiency in LOgistics
industry

 (Real -Time) Route Optimization:

• This enables companies to save time and cost on staff
manual sequencing
• Reduce mileage and minimize unsuccessful deliveries
•  UPS has saved over 39 million gallons of fuel and avoided 364
million miles since they started route optimization in 2001.

 Address verification: Address verification tools ensure the data entered into a
database is accurate upon entry with real-time auto-complete and offers faster
deliveries and optimized routes via accurate GeoCoordinates.
 Real-time analysis:
  Sensors in vehicles are capable of reporting data ın
real-time.
 improve performance and process quality as well as
optimizing resource consumption 

 Shift Planning:
  In logistics, calculating and managing shifts are not only subjected to staff
availability.
 It involves many other parameters such as network planning ,supply chain
planning, transport capacity planning and periodic busy times.

 Risk planning:
To anticipate internal risks such as shipping styles, maintenance
requirements, shipping routes and external risks like weather conditions,
road conditions, busy periods etc

 customer Experience
Process Flowchart For ROUTE
OPTIMIZATION

Goals of Shipping
Routes
optimization

IDENTIFYING
SOLUTIONS PROBLEMS

APPROCH METHODS
 Improving Operations with Route
Optimization
GOALS:
 All orders need to be delivered on time.

 Ensure drivers are not rushed to make it on time by

using buffer times and real-time distance.

 Save fuel by reducing the distance driven.

 Minimise idle time for drivers — no one likes waiting with a

trunk full of packages.

 Improve vehicle utilisation.

 Fully automate the process.

 The algorithm needs to be able to grow with us —

supporting different types of deliveries, vehicles and
countries.
ROUTE AND LOGISTICS
OPTIMIZATION PROBLEMS

Fleet Management
• Driver Safety, Efficiency, Compliance
• Vehicle Predictive Maintenance
• Vehicle Cost & Replacement

Supply Chain
• Real-time Supply Chain 360
• Risk Detection
• Next Best Route
• Inventory Replenishment

Delivery
• On-spec Delivery
• Route Optimization
• Driver to Order Matching
• Order Recommendation (to reduce redeliveries)
• Profit Forecasting
 ROUTE AND LOGISTICS
OPTIMIZATION ALGORITHMS

Knowledge Mining
• Structured/Unstructured Big Data Integration Signal Processing
• Graph Machine Learning • Deep Learning Forecasting
• Natural Language Processing
• Anomaly Detection
• Computer Vision
• Conversational Bots

METHODS
Recommendation Engines Reinforcement Learning
• Content Filtering • DDPG
• Collaborative Filtering • A3C
• Matrix Factorization • Contextual Bandits
 The Vehicle Routing Problem

 VRP is the challenge of designing optimal routes from a depot to a set of destinations each
with business-specific constraints.

 Vehicle limitations, cost controls, time windows, resource limitations concerning the
loading process at the depot, etc.

 The first classic VRP is known as the traveling salesman problem (TSP), which
originated in the early 1800s and became widespread in the days when door-to-door
salesmen peddled vacuum cleaners and encyclopedias.
 • Capacitated Vehicle Routing Problem
(CVRP)
One

• Vehicle Routing Problem with Time Windows

(VRPTW)
Two

• Pickup and Delivery Vehicle Routing Problem

(PDVRP)
Three
Capacitated Vehicle Routing Problem (CVRP)

The challenge is to save costs by transporting more goods in one trip

without exceeding the vehicle’s capacity.

There might be additional complications like:

 multiple depots

 limited subset of vehicles that have a specific facility in demand (e.g. a

freezer compartment)

 different dimensions of cargo to deliver/pick up

 different capacity of each vehicle

 multi-compartment vehicles
 Real-life scenario:
Tesco Company, a global groceries and general merchandise retailer, uses over-the-
road vehicles for goods distribution.
The goods are transported on pallets.
One vehicle can hold a limited number of pallets, while each business
unit (BU) demands a different number of them.
For instance, large department stores need several times more pallets than the vehicle
can fit.

Approach to solution:
Assign the shortest routes to vehicles so that the total amount of units for the vehicle meets its
capacity limitations.

solving CVRP where depot is in black, BUs

– in blue, and demanded cargo quantity –
at the lower right of each BU
Vehicle Routing Problem with Time Windows
(VRPTW)
Often customers are available during a specific period of time only. This places limitations on
delivery/pick-up time, as now a vehicle has to reach a customer within a prioritized
timeframe. When a time window opens, a vehicle should serve the customer. It may arrive
beforehand, but, by no means, outside the set time window.

Time windows can be:

 Multiple time windows: a set of non-overlapping time windows with different lengths
 Disjoint time windows: arriving between two time windows, a vehicle must wait until the
next time window opens
 Soft time windows: serving outside the time window is allowed, but it entails penalties
 Hard time windows: no time violations are permitted. If a vehicle arrives too early, it must
wait until the time window opens; and it is not allowed to arrive late.
Real-life scenario:
Let’s take FedEx. A package has arrived at the destination country and is accepted by a last-
mile carrier. Now it needs to be efficiently transported to the distribution center. From there, a
courier will receive the package and deliver it to a customer who will be waiting for their
package on Tuesday from 9 to 10 in the morning. So a courier mustn’t be late. But there are
other 11 packages on the agenda, each with a specified timeframe. VRPTWs need to be solved
everywhere: from bank, postal, restaurant, or supermarket deliveries, to school bus routing and
security patrol services.

Approach to solution:
So how to be on time everywhere, while taking
the shortest routes? We need to connect the
dots: find a set of routes of minimal total
traveling cost and maximal customer
satisfaction which in this case is reached by
complying with the prioritized time windows.

VRPTW visualized: blue – customers to visit with their time

windows above, black dot – depot
Pickup and Delivery Vehicle Routing Problem (PDVRP)

Each vehicle picks up items/passengers at location A and drops them off at location B. No
depot is involved. Usually with PDVRP, we talk about simultaneous delivery and pickup.

Real-life scenario:
This problem concerns transportation requests. Take Uber as an example. The system has to
efficiently assign drivers to locations so that it takes them the least time to get there and pick
up a customer.

Approach to solution:
Assign routes to the vehicles to pick up and
deliver passengers. Customer’s request must be
met as early as possible by minimizing the total
length of vehicles’ paths.

Pickup and delivery locations as blue circles and the routes

between them
 Case Study

Solving the Vehicle Routing Problem for Optimizing

Shipment Delivery at Flipkart
 Automating Route Plans

• Formulate it as an optimisation problem

• Associate cost function W with every configuration of route
and find the configuration that minimises cost function
• Standard choice for cost function: Sum of total travel time of
all Fes/routes
• Special case of single FE: Travelling Salesman Problem
 Formulating the problem

Given
 N customers(and depot) location (vertices)
(xi,yi),i=0,1,2,…,N
 Pairwise travel time (or distance) matrix
Qij,i=j,I,j=0,1,2,…N
 Serviceable time window(customer)[tiE,tiL]
 m vehicle each with max capacity Q each
 Formulating the problem
Determine:

Routes:

1. Each customer is covered by exactly one route

2. Time window compatibility

3.

Minimize the cost function

Feasible Solution: All the hard constraints(time-window

and capacity are satisfied
Total Cost
 Approximate Algorithm Approach

Exact algorithms are computationally expensive so we use

approximate algorithm
Broadly. characterized by two stages
o Construction Heuristics: Construction of initial
feasible routes
o Improvement Heuristic: Iteratively improve the routes
by intra- and inter- route reconfiguration
 Construction Heuristic(Insertion Feasibility)

Inserting an unrouted customer v between neighbouring customers u

and w in a route.

Service time at each customer: 10 minutes

 Construction Heuristic(Insertion Feasibility)

Even when feasible, there is shrinkage in time windows.

Neighbouring customers shrinkage in time windows.

Original time
window width: 15
minutes
Construction Heuristic(Insertion Feasibility)

Insert the customer

That minimises the
minimum insertion
cost
 Improvement Heuristic
2 Phases

EJECTION REINSERT
 Results(Time Windows)

Out-of-box Solver Our Algorithm

 Results(Time Windows)
Out-of-box(8 Vehicles) Our Algorithm (8 Vehicles)
Travel: 4542.85 Travel: 4481.95
Fairness: 266.14 Fairness: 150.34
Outliers:916.1 Outliers: 422.49
Compactness:2900.22 Compactness: 768.1
Total:8625.29 Total: 5822.86
 Results(Without Time Windows)

Out-of-box Solver Our Algorithm

 Results(Without Time Windows)

Out-of-box(28 Vehicles) Our Algorithm (28 Vehicles)

Travel: 15987.73 Travel: 15352.31
Fairness: 317.19 Fairness: 2501.41
Outliers: 18681.82 Outliers: 1055.77
Compactness: 5228.24 Compactness: 675.76
Total: 40214.99 Total: 19885.27
 References

• https://youtu.be/v9tUEsHD6BE
• https://www.strategywise.com/logisticsandroutingpoweredbyai/
• https://blog.flexis.com/5-steps-for-optimizing-your-shipping-routes
• https://www.altexsoft.com/blog/business/how-to-solve-vehicle-routing-problems-r
oute-optimization-software-and-their-apis/
• file:///C:/Users/Manan/AppData/Local/WhatsApp/app-2.2039.9/resources/app.asa
r/index.html#
• file:///C:/Users/Manan/AppData/Local/WhatsApp/app-2.2039.9/resources/app.asa
r/index.html#
• file:///C:/Users/Manan/AppData/Local/WhatsApp/app-2.2039.9/resources/app.asa
r/index.html#
• file:///C:/Users/Manan/AppData/Local/WhatsApp/app-2.2039.9/resources/app.asa
r/index.html#
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