Optimal Allocation of Three Modes for the Intercontinental Transportations of Mass-Market Products

Abstract

There is a trend toward the world's manufacturing sites moving to East Asia. After manufacture, these products are transported to the advanced nations for their consumption demands. Among such advanced nations, the U.S.A. has the largest demand, and then Japan and European countries follow. It should be noted that the infrastructures of the Asian districts used for the production sites are rather limited, and the volume of products transported from these districts of Asia to the U.S.A is becoming tremendously large. This situation is causing very serious traffic problems. New products are required to be transported swiftly by air. Once the consumption and market demands are stable however, the products should be sent rather slowly, but in larger amounts. However, the airports of China are quite restricted in capacity, while the transportation volume is becoming large. As a result, transportation cost and the time required for transportation are increasing. Now, a third method is appearing. This is the so-called Sea and Air transportation. The cost and time in transit of this mode take mean positions between Air and Ocean services. At present there exists no well-thought-out strategy for how to allocate these three methods of transportation. This paper is an attempt to theoretically describe this mechanism and to discover the optimal way to allocate the three modes. For this purpose, several mathematical properties of value and cost of the products are defined, and on this basis a simulation of the transportation is established.