Track: Supply Chain Management (SCM)

Abstract

Demand uncertainties give challenges in transportation service procurement. Many companies only using long-term contract carrier which does not provide flexibility under the instability of transportation demand. This research aims to understand the behavior of transportation planning using two transportation sources namely contract and spot market carrier in terms of product availability in the market and the transportation cost. The contract carrier refers to the long-term agreement between a shipper and a carrier while a shipper is also available to purchase their transportation in the spot market in order to satisfy the excess demand. The simulation study is developed to capture the behavior of the system subject to the uncertainty of the demand, distribution process, and the complexity of the system. The results show that the utilization of spot carrier increases the availability of the product in the market, yet it also increases the total transportation cost and reduces the utilization of the trucks.