Nonparametric cost evaluation of the Department of Defense's small parcel shipping procedures

Abstract

The current Department of Defense shipping procedures do not encourage Installation Transportation Officers (ITOs) to use small parcel carriers (SPCs) for domestic ground transportation. There is still a significant amount of small parcels being shipped by the more expensive common carriers used for large Truckload and Less-Than-Truckload freight. The first purpose of this thesis is to show small parcels can be shipped more efficiently by SPCs than common carriers. The second purpose is to predicted the optimal breakpoint weights that will bolster the greatest reduction in shipping cost. The results can be applied to current procedures to encourage the ITOs to best employ the SPCs. Nonparametric data analysis techniques are used to test hypotheses made about the data for fiscal year 1994. The first test shows potentially 3.1 million dollars can be saved annually using United Parcel Service (UPS) for all qualified parcels. The second series of tests bounds the optimal breakpoint weight for Over-The- Counter UP S rates and discounted UP S rates. By using the intersection of two lines of regression, the resulting breakpoints were 116 and 130 pounds, respectively. The second tests show potentially 3.4 to 3.8 million dollars can be saved annually using UPS for the above breakpoint strategies. Distribution Limitation