Designing a Distribution Network for Faster Delivery of Online Retailing : A Case Study in Bangkok, Thailand

Abstract

Purpose - The purpose of this paper is to partition a last-mile delivery network into zones and to determine locations of last mile delivery centers (LMDCs) in Bangkok, Thailand. Research design, data, and methodology - As online shopping has become popular, parcel companies need to improve their delivery services as fast as possible. A network partition has been applied to evaluate suitable service areas by using METIS algorithm to solve this scenario and a facility location problem is used to address LMDC in a partitioned area. Research design, data, and methodology - Clustering and mixed integer programming algorithms are applied to partition the network and to locate facilities in the network. Results - Network partition improves last mile delivery service. METIS algorithm divided the area into 25 partitions by minimizing the inter-network links. To serve short-haul deliveries, this paper located 96 LMDCs in compact partitioning to satisfy customer demands. Conclusions -The computational results from the case study showed that the proposed two-phase algorithm with network partitioning and facility location can efficiently design a last-mile delivery network. It improves parcel delivery services when sending parcels to customers and reduces the overall delivery time. It is expected that the proposed two-phase approach can help parcel delivery companies minimize investment while providing faster delivery services.