Abstract
This paper proposes a centralized supply chain network optimization model that maximizes the total profit obtained by a company that produces and/or outsources production, stores, ships and sells products to customers using a fleet made up of trucks and, in the last mile, also of drones. The model includes realistic features of unmanned aerial vehicles (UAVs) in the form of drones with fundamental limitations such as low battery capacities and short delivery ranges. The constrained nonlinear optimization problem is formulated as a variational inequality. Existence and uniqueness results for the solution of the variational inequality are provided along with the results of detailed numerical simulations that emphasize the advantages of the use of a hybrid fleet from enhanced profits to reduction in air pollution. Our quantitative results reveal great promise and insights for the logistics industry in the use of emerging UAV technologies for last mile parcel deliveries as a practical solution within a holistic supply chain network context.
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