JD.com Improves Delivery Networks by a Multiperiod Facility Location Model

Abstract

Because delivery systems play an increasingly significant role in modern life, it is of strategical importance to design an efficient and adaptive delivery network. JD.com is the largest business-to-consumer e-commerce company by revenue in China and has built the largest amount of logistics infrastructure nationwide. In this study, we developed an optimization model to automatically make annual plans of the delivery stations that minimize operational costs. We built an optimization algorithm by adopting a multiperiod facility location model a using mixed-integer linear programming (MILP) method and proposing applicable techniques to solve the model. The results demonstrate that our model generates improved plans compared with manually planning in terms of both operational cost and delivery distance. The tool described in this paper helps JD.com save on delivery costs and gain operational benefits in designing delivery networks.