Abstract: The Vehicle Routing Problem with time windows is an important and practical problem for logistics managers. In reality, when facing fluctuations of demand, logistics managers may consider using an outside carrier to satisfy partial customer demand during the peak season. That is, the logistics managers must make a selection between a truckload (a private truck) and a less-than-truckload carrier (an outside carrier). Selecting the right mode to transport a shipment may bring significant cost savings to the company. In this paper, we address the problem of routing a fixed number of trucks from a central warehouse to customers with known demand and time windows. A heuristic algorithm is developed
for routing the private trucks with time windows and for selecting of less-than-truckload carriers by minimizing the total cost function. Computational results are encouraging and some suggestions for future research are presented.