Prof.

Milind Jagtap

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 Problem Formulation
Delivery locations that involves material delivery
from a single material yard to the various delivery points
which are
i) Geographically apart
ii) Order sizes are different
iii) Delivery timing(due dates) are different
iv) Consumption rates at site are different

How to ensure material requirements of different

delivery locations by routing and scheduling minimal
number of vehicles in a logistics network

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Principle of Savings Matrix Method
Longer the two delivery locations from
the main material yard, but closer to
each other, will potentially generate
more logistics cost savings.
S ( A, B) = Dist( A, W ) + Dist( B, W ) − Dist( A, B)

Example :
S (1,2) =

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Routing & Scheduling in Transportation

Outline
Vehicle Scheduling Problem
SAVINGS MATRIX METHOD
 Identify Distance Matrix
 Identify Savings Matrix
 Rank Savings
 Assign delivery locations to Vehicles
 Sequence delivery locations within Routes
 Construction and Improvement Procedures
 Example

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 Vehicle Scheduling Problem

 Assume that
 There are orders from 5 different delivery locations.
 There are 2 carriers available to a transporter each
capable of carrying 200 tons of load.

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 Vehicle Scheduling Problem

X Coordinate Y Coordinate Order Size

Main Yard 0 0
1 0 12 48
2 6 5 60
3 7 15 43
4 9 12 92
5 15 3 80

Assume that the site locations and order sizes are as

shown above.
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 Vehicle Scheduling Problem

1 4

5
2
W
Location
LocationofofWarehouse
Material yard and Customers
and project sites
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 Savings Matrix Method
• Following are the steps of the Savings Matrix
Method:
1. Identify distance matrix
2. Identify savings Matrix
3. Rank savings
4. Assign project sites to vehicles
5. Sequence project sites within routes

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 Identify Distance Matrix
• First, the Euclidean distances are computed. The
formula and a sample computation is shown below.
The other distances are computed similarly and
shown on the next slide.
Dist ( A, B ) = (x A − xB ) + ( y A − y B )
2 2

Dist(1,2) = Square root [(0-6)**2+ (12-5)**2)]

= Sqrt(36+49)= Sqrt(85)=9.2

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 Identify Distance Matrix

Distance Matrix
MY S1 S2 S3 S4 S5
MY 0 12.0 7.8 16.6 15.0 15.3
S1 0 9.2 7.6 9.0 17.5
S2 0 10.0 7.6 9.2
S3 0 3.6 14.4
S4 0 10.8
S5 0

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 Identify Savings Matrix
• The savings are computed for all pairs of sites
using the data from the distance matrix. The
formula and a sample computation is shown below.
The other savings are computed similarly.

S ( A, B) = Dist( A,W ) + Dist( B,W ) − Dist( A, B)

Example :
S (1,2) =

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 Identify Savings Matrix

Savings Matrix
S1 S2 S3 S4 S5
S1 0 10.6 20.9 18.0 9.8
S2 0 14.3 15.2 13.9
S3 0 27.9 17.4
S4 0 19.5
S5 0

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 Rank Savings
• The next step is to rank the savings.The idea is to
merge those two sites to the same vehicle, whose
merging gives the highest savings.
• The savings are ranked from high to low.
• From the savings matrix shown on the previous
slide, the highest savings of 27.9 is obtained by
merging sites 3 and 4 to the same vehicle.
• Next highest savings of 20.9 is obtained by
merging sites 1 and 3 to the same vehicle.
• Similarly the other savings are ranked and shown
on the next slide.

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 Rank Savings

Savings Matrix
S1 S2 S3 S4 S5
S1 0 10.6 20.9 18.0 9.8
S2 0 14.3 15.2 13.9
S3 0 27.9 17.4
S4 0 19.5
S5 0

Rank (3,4) (1,3) (4,5) (1,4) (3,5)

(2,4) (2,3) (2,5) (1,2) (1,5) 14
 Assign project sites to Vehicles
Next, merge
the sites. The
pair giving the 3 Order
Site
Size
highest
1 4 1 48
savings is
2 60
merged first if
3 43
the capacity is
5 4 92
available.
2 5 80
W
Location of material yard and project sites

Rank (3,4) (1,3) (4,5) (1,4) (3,5)

(2,4) (2,3) (2,5) (1,2) (1,5) 15
 Assign project sites to Vehicles
To merge the
lowest ranked
pair (3,4), the 3 Order
Site
Size
capacity
1 4 1 48
required =
2 60
43+92= 135 <
3 43
200 = capacity
5 4 92
available. So,
2 5 80
merge 3 and 4.
W
Location of material yard and project sites

Rank (3,4) (1,3) (4,5) (1,4) (3,5)

(2,4) (2,3) (2,5) (1,2) (1,5) 16
 Assign project sites to Vehicles
To merge the
next pair (1,3),
capacity 3 Order
Site
Size
required =
1 4 1 48
43+92+40=
2 60
175 < 200 =
3 43
capacity
5 4 92
available. So,
2 5 80
merge 1 and 3
W
(and 4).
Location of material yard and project sites

Rank (3,4) (1,3) (4,5) (1,4) (3,5)

(2,4) (2,3) (2,5) (1,2) (1,5) 17
 Assign project sites to Vehicles
Merging (4,5),
(3,5), (2,4) and
(2,3) requires 3 Order
Site
Size
more capacity
1 4 1 48
than available.
2 60
The pair (1,4)
3 43
is already
5 4 92
merged. So,
2 5 80
the pairs are
W
crossed out.
Location of material yard and project sites

Rank (3,4) (1,3) (4,5) (1,4) (3,5)

(2,4) (2,3) (2,5) (1,2) (1,5) 18
 Assign project sites to Vehicles
The next pair
(2,5) are
merged and 3 Order
Site
Size
assigned to a
1 4 1 48
new vehicle as
2 60
the capacity
3 43
available =
5 4 92
200 > 60 + 80
2 5 80
= 140 =
W
capacity
required. Location of material yard and project sites

Rank (3,4) (1,3) (4,5) (1,4) (3,5)

(2,4) (2,3) (2,5) (1,2) (1,5) 19
 Sequence project sites
 The next step is sequencing site assigned to the
same vehicle. A question is in what sequence will the
first vehicle visit site 1, 3 and 4 and return to the main
yard? Similarly, another question is in what sequence
will the other vehicle visit site 2 and 5.
 This problem is popularly called the traveling
salesman problem.
 We shall use the nearest neighbor rule which states
that always visit the site that is nearest.

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 Sequence project sites
3
First, consider the problem of
sequencing project sites 1, 3 4
1
and 4 who are assigned to the
same vehicle. The relevant
distances are copied from the 5
distance matrix and shown 2
below. W
Location

Distance Matrix
MY S1 S3 S4
MY 0 12.0 16.6 15.0
S1 0 7.6 9.0
S3 0 3.6
S4 0 21
 Sequence project sites

Among 1, 3 and 4 is 1 is the 3

nearest to Main yard. So, the 4
1
vehicle will first travel from
main yard to site 1. The row
(=from) corresponding to main 5
yard and the column (=to) 2
corresponding to site 1 are W
crossed out. Location
Distance Matrix
MY S 1 S3 S4
MY 0 12.0 16.6 15.0
S1 0 7.6 9.0
S3 0 3.6
S4 0 22
 Sequence project sites

Between 3 and 4 is 3 is the 3

nearest to 1. So, the vehicle 4
1
will travel from 1 to 3. The
row (=from) corresponding to
site 1 and the column (=to) 5
corresponding to site 3 are 2
crossed out. W
Location
Distance Matrix
MY S 1 S 3 S4
MY 0 12.0 16.6 15.0
S1 0 7.6 9.0
S3 0 3.6
S4 0 23
 Sequence Customers

The only possible tour is 3

then W-1-3-4-W. Next,
consider the problem of 1 4
sequencing site 2 and 5
who are assigned to the
5
same vehicle. The relevant 2
distances are copied from W
the distance matrix and Location
shown below.
Distance Matrix
MY S2 S5
MY 0 7.8 15.3
S2 0 9.2
S5 0
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 Sequence project site

Between 2 and 5 is 2 is the 3

nearest to the main yard. So,
1 4
the vehicle will travel from the
main yard to site 2. The only
tour is then W-2-5-W. Note: due 5
to symmetry both W-2-5-W and 2
W-5-2-W have the same W
distance traveled. Location
Distance Matrix
W S2 S5
MY 0 7.8 15.3
S2 0 9.2
S5 0
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Construction and Improvement Procedures
• The nearest neighbor rule just discussed is a tour
construction procedure which can construct a tour
when there is no tour.
• The nearest neighbor rule is only a heuristic and
does not guarantee optimality. The tour obtained by
the heuristic may provide improvement opportunities.
• If a tour intersects its own path, the tour can be
improved. An improvement procedure will be
discussed now.

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Construction and Improvement Procedures
• For example, consider the
locations and the tour
shown on the right. 4
• From the Main yard, 1 is
the nearest. From 1, 2 is
the nearest, etc. So, the
nearest neighbor rule
produces the tour W-1-2-3- 1 3
4-W. 2
• However, the tour W
intersects itself. The arc
(1,2) intersects arc (4,W).

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 Construction and Improvement Procedures
• The improvement
procedure has three
steps. 4

• Step 1: Remove the

intersecting arcs. The
result is two disjointed
paths 1 3
2
W

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 Construction and Improvement Procedures
• Step 2: Arbitrarily choose
one of the two disjointed
paths and reverse the 4
path. In this picture, 2-3-4
is reversed to get 4-3-2.
One could as well
reversed 1-W to W-1.
1 3
• Step 3: There is only one 2
way to get a tour from the W
two resulting paths.
Construct the tour.
(continued..)
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 Construction and Improvement Procedures
• Step 3 continues: For
example, here the tour is
constructed by adding 4
arcs (1,4) and (2,W)

• Note: The resulting tour

may include a new
intersection. In such a 1 3
case, apply the procedure 2
again!. W

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