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Abjar Transport Company Case Study

Samir Khaldoun was tasked with stabilizing and developing Abjar Transport, a family-owned transport company in Saudi Arabia. An immediate problem was determining the optimal number of trucks needed to handle forecasted freight volumes, which had previously been done without comprehensive planning. Samir forecasted that freight volumes would average 160,000 tons per month with a 30,000 ton standard deviation. After analyzing truck types, cargo capacities, and operational patterns, Samir needed to determine the number of tractor-trailer rigs required for the Abjar Transport fleet.

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Nisara Sudthawornkul
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139 views1 page

Abjar Transport Company Case Study

Samir Khaldoun was tasked with stabilizing and developing Abjar Transport, a family-owned transport company in Saudi Arabia. An immediate problem was determining the optimal number of trucks needed to handle forecasted freight volumes, which had previously been done without comprehensive planning. Samir forecasted that freight volumes would average 160,000 tons per month with a 30,000 ton standard deviation. After analyzing truck types, cargo capacities, and operational patterns, Samir needed to determine the number of tractor-trailer rigs required for the Abjar Transport fleet.

Uploaded by

Nisara Sudthawornkul
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Abjar Transport Company

In 1998, Samir Khaldoun, after receiving an MBA degree from a leading university in the United
States, returned to Jeddah, Saudi Arabia, where his family has extensive business holdings. Samir’s
first assignment was to stabilize and develop a newly formed, family-owned transport company--Abjar
Transport.

An immediate problem facing Samir was the determination of the number of trucks needed to handle
the forecasted freight volume. Heretofore, trucks were added to the fleet on an “as-needed” basis
without comprehensive capacity planning. This approach created problems of driver recruitment, truck
service and maintenance, and excessive demurrage (that is, port fees) because of delays at unloading
docks and retention of cargo containers.

Samir forecasts that Abjar’s freight volume should average 160,000 tons per month with a standard
deviation of 30,000 tons. Freight is unloaded on a uniform basis throughout the month. Based on past
experience, the amount handled per month is assumed to be normally distributed, as seen in the
following table:

After extensive investigation, Samir concluded that the fleet should be standardized to 40-foot
Mercedes 2624 2 3 4 tractor-trailer rigs, which are suitable for carrying two 20-foot containers, one
30-foot container, or one 40-foot container. Cargo capacity is approximately 60 tons per rig. Each
tractor-trailer unit is estimated to cost 240,000 riyals. Moreover, they must meet Saudi Arabian
specifications—double cooling fans, oversized radiators, and special high-temperature tires. Historical
evidence suggests that these Mercedes rigs will operate 96% of the time.

Approximately 25% of the freight handled by these tractor-trailer rigs is containerized in container
lengths of 20, 30, and 40 feet. (The balance of the freight—75%—is not containerized.) The 20-foot
containers hold approximately 20 tons of cargo, the 30-foot containers hold 45 tons, and the 40-foot
containers hold 60 tons of freight. Approximately 60% of the containerized freight is shipped in 40-
foot units, 20% is shipped in 30-foot units, and 20% is transported in 20-foot units.

Abjar Transport picks up freight at the dock and delivers it directly to customers, or warehouses it for
later delivery. Based on his study of truck routing and scheduling patterns, Samir concluded that each
rig should pick up freight at the dock three times each day.

How many tractor-trailer rigs should make up the Abjar Transport fleet?

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