Determination of cutoff time for express courier services: a genetic algorithm approach

Abstract

AbstractAs the result of an explosive growth in e‐tailing, telemarketing, and television home‐shopping industries, the demand for the direct shipment of purchased goods by express couriers has increased over the last several years. The success of an express courier service often depends heavily on the direct marketing firm's ability to extend its cutoff time (deadline) for direct home deliveries coordinated by service centers near customers. Such an extension of cutoff time, however, may prolong consolidation holding time at the consolidation terminal and subsequently disrupt the timely delivery of products to customers. To make a trade‐off between cutoff time extension and delivery delays, we propose an integer programming model and its genetic algorithm solution procedure that allows express couriers, such as UPS, FedEx, and DHL, to maximize their profit generated by direct home deliveries. To demonstrate the practicality and efficiency of the proposed model and solution procedure, we conducted a case study involving an express courier in Korea.