Integration of the Load-Matching and Routing Problem with Equipment Balancing for Small Package Carriers

Abstract

Small package delivery is a multibillion dollar industry with complex planning decisions required to efficiently utilize costly resources and meet tight time requirements. The planning process is typically decomposed into sequential subproblems to establish tractability. This decomposition can greatly degrade solution quality. This paper therefore considers the integration of two closely related key subproblems: load matching and routing and equipment balancing. First, we identify critical challenges faced in trying to solve these problems. Then we present a novel modeling approach to address these challenges. Finally, we conclude with computational results from United Parcel Service, the world’s largest package delivery company, demonstrating an improvement of approximately 5% over the company’s existing methods for solving this pair of problems.