The focus of manufacturing organisations on their core competencies has placed third-party logistics service providers (3PL) in an ideal position to deal with supportive activities such as material handling, transportation, and storage using their expertise and economies of scale. This study considers the problem of determining the optimal fleet size of heterogeneous trucks to be outsourced from an 3PL to fulfil the demand of various raw materials requirements by a production facility while achieving a minimum total cost of these daily operations. Trucks are deployed in an inter-facility material transportation system with different raw materials from designated storage areas to be transported to specified buffer locations as per the production requirements. In a typical material forward flow, a truck undergoes many sub-processes with stochastic service times that vary with the type of material it carries and the type of the truck. Each material encompasses different physical attributes and specific job routings. Within this context, the inter-facility transportation process is modelled as a closed queueing network and a mathematical model is developed to determine the optimal number of heterogeneous trucks to be outsourced, from a 3PL, while fulfilling the production requirements. A Discrete event simulation model, using Anylogic simulation software, is employed for solving the model to determine the optimal fleet size of trucks and their specific heterogeneous composition. Moreover, the simulation model is used to determine the main performance measures of the system such as sub-process response times, queue lengths, cycle times, resource utilisations, and bottlenecks to assist in the decision-making process.

Keywords
Material handling system, fleet sizing, heterogeneous fleet, Simulation, queueing theory.