Improving the Operational Efficiency of Parcel Delivery Network with a Bi-Level Decision Making Model

Daisik Nam,Minyoung Park

doi:10.3390/su12198042

Abstract

This article proposes a mathematical model for integrating terminal operation strategies with shipment scheduling. We are motivated by findings from the literature on the integrated design of logistic systems. The objective of this research is to efficiently utilize the existing hub terminals and transport network by considering the minimization of costs related to terminal congestion, transport, and carbon dioxide (CO2) emissions. Cooperative behaviors of terminal managers and fleet assignment managers are modeled in a bi-level problem framework. The total cost includes a processing cost and transport cost, and CO2 related to the assigned fleets. We introduce a terminal cost function to capture the relationship between unit processing cost with respect to hub delay, which allows us to find the minimum cost path and efficiently distribute shipments to hub terminals. The case study shows that the collaborative logistics outperforms a single routing strategy and capacity expansions in minimization of both total cost and CO2 emissions.

Highlights

App-based mobile and online shopping services have driven the majority of the growth in the parcel delivery market
We propose a smart logistic system design by formulating a bi-level problem that reflects the behavior of the collaborative consumption of existing supply between a terminal manager and a fleet router
The result of the case study implies that the smart usage of hub terminal capacity improves the efficiency of a logistic system

Summary

Introduction

App-based mobile and online shopping services have driven the majority of the growth in the parcel delivery market. These services require logistic companies to set operationally efficient strategies to profit from the growth. Building new logistic terminals might be one solution to handle increased demand from excessive shipments arriving at terminals that lead to various logistical inefficiencies. Land-use policies such as NIMBY (Not in my Backyard) and environmental concerns might prohibit the construction of large-scale logistic terminals. We contend that instead of investing in new logistic terminals, a smart logistic system can be more efficient by assigning trucks optimally and through terminal capacity management. Capacity planning devises the utilization of physical capacity to prevent exponentially growing shipment costs when shipment arrivals approach handling capability [3]

Objectives

Findings

Discussion

Conclusion