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OPTIMIZATION OF PARCEL LOGISTICS

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Title: OPTIMIZATION OF PARCEL LOGISTICS


1
OPTIMIZATION OF PARCEL LOGISTICS
  • ANDREJ LISEC
  • University of Maribor
  • Faculty of Logistics
  • Email andrej.lisec_at_uni-mb.si
  • ISEP 2007

2
INTRODUCTION
  • The Post of Slovenia has a leading position in
    providing parcel services in Slovenia. The volume
    of parcel flows between Posts is increasing
    rapidly and it requires a new construction of the
    postal network. A case for the area covered by
    Ljubljana Postal Logistics Center is given, which
    takes into consideration the sorting out and the
    retaining of parcels in the Posts, Parcel Posts
    and Regional Parcel Centers within their
    individual areas.

3
BASIC POSTAL PROBLEMS
  • At companies, which are dealing with parcels, the
    basic problem is
  • to determine the optimal number of Posts as hubs
    patronizing separate areas (Regional Parcel
    Centers), and to determine the location and the
    size of hubs
  • to determine optimal fixed locations of Postal
    Logistics Centers, patronizing Regional Parcel
    Centers, location of Regional Parcel Centers,
    patronizing Parcel Posts and Parcel Posts
    patronizing area of inhabitants.

4
IN ALL POSTS WE NEED TO ACHIEVE
  • An effective collection and sorting of parcels
  • A reliable delivery
  • An effective transport.

5
POSTAL HUB
  • Postal hub is a special type of central facility,
    which can act as transshipment point in postal
    transportation systems with many origins and
    destinations.

6
INCREASING THE NUMBER OF PARCELS
  • E-commerce influences the increase of parcel
    services all over the world. How to satisfy this
    demand properly? New technologies and modern
    organization in postal services could improve a
    design of postal systems and especially the
    logistics of these systems.

7
CASE OF INCREASING THE NUMBER OF PARCELS IN
SLOVENIA
8
PRESENT AND FUTURE ORGANISATION OF SPATIAL POSTAL
HIERARCHY
  • Central European regions are improving their
    postal services. Also Post of Slovenia would like
    to follow these efforts. The paper presents an
    approach to the spatial optimization of postal
    services, particularly as applicable to the Post
    of Slovenia.
  • In Slovenia up to now two Postal Logistics
    Centers (PLC) have been opened in last nine
    years. We have made the evaluation of logistics
    costs considering two instead of one PLC.
  • According to our research results proper capacity
    and allocation of Regional Parcel Centers and
    Parcel Posts should be carried out. In this case
    the hierarchy would be the following - one or
    two Postal Logistics Centers, - five or less
    Regional Parcel Centers, each of them having
    three to twelve Parcel Posts, the Parcel Posts
    are patronizing twenty or less posts.

9
MODELS FOR SOLVING POSTAL PROBLEMS
  • The paper considers an optimal allocation of
    modern Postal Logistics Centers in given spatial
    structure of regional central places in Slovenia,
    where the model of Bruns, A., presented in the
    paper Restructuring of Swiss Parcel Delivery
    Services, OR Spektrum, (2000), developed for
    Post of Switzerland, has been applied and
    extended to evaluate the second PLC in Maribor.
  • Ebery described the capacitated multiple
    allocation for hub location problem. We are
    upgrading his approach to evaluate the flows
    between PLCs and Regional Parcel Centers (RPC)
    patronizing given set of Parcel Posts (PP). In
    our approach the number of chosen PPs can be
    changed step by step, which depends on volume of
    parcels coming from or going to a certain RPC per
    day.

10
APPLICATION OF THE BRUNS MODEL TO THE POST OF
SLOVENIA
  • We have evaluated (the previously realized
    decision) whether the second Postal Logistics
    Center allocated in Maribor had been economically
    justified in the chosen past moment.
  • The results are the Postal Logistics Center in
    Maribor as an addition to the Ljubljana Postal
    Logistics Center is acceptable if the fixed costs
    of services at the Postal Logistics Center in
    Maribor do not exceed a certain critical value
    (2,78 times of fixed costs in PLC Ljubljana).

11
POSTAL MODEL OF EBERY
  • Ebery, J. et al. (2000) in the paper The
    capacitated multiple allocation hub location
    problem Formulations and algorithms in European
    Journal of Operational Research, 120, have
    formulated capacitated multiple allocation hub
    location problem as
  • Here wij is the volume of the associated
    traffic stream, cijkm is the cost of sending one
    unit of traffic from i to j, via hubs k and m,
    xijkm denotes the fraction of flow that is
    directed from node i to j via hubs located at k
    and m. fk is the fixed cost associated with the
    open hub at node k. yk is defined by

12
CONSTRAINTS OF EBERYS MODEL
  • Equation ensures that the total flow from node i
    to j is transferred
  • Intensity of flow from i to j through node k
    does not exceed capacity of node k
  • (the same equation is valid also for
    m)
  • Transfers only occur via hubs

  • and
  • is 0 or 1
  • The variable has values between 0
    and 1

13
POSTS IN SLOVENIA
  • In Slovenia there are
  • now 557 posts. The
  • flows of parcels are
  • directed from post to
  • post until the truck is fully
  • loaded and then sent
  • to PLC Ljubljana or PLC
  • Maribor and back.
  • Potential RPCs are not open yet, but could appear
    in Regional Business
  • Units. They will patronize PP. Extended Eberys
    model will allow direct
  • flows between RPCs in some cases.
  • In all presented Regional Centers up to now only
    regional administration is
  • located.
  • The analysis shows that 4 level spatial hierarchy
    would reduce the daily
  • logistics costs substantially.

14
TEMPORARY FLOWS OF PARCELS IN SLOVENIA
15
PROPOSED TRANSPORTATION NETWORK IN SLOVENIA AS
EXTENSION OF EBERYS MODEL
  • With using the statistics of parcels in year
    2003, 2004 and flows between posts in year 2005
    we developed the new transportation network for
    Post of Slovenia with Regional Parcel Centers and
    Parcel Posts with criteria of 24 hour time window
    delivery.

16
AVERAGE DAILY NUMBER OF PARCELS COLLECTED INSIDE
THE REGIONS
17
AVERAGE DAILY NUMBER OF PARCELS DELIVERED INSIDE
THE REGIONS
18
EXTENSION OF EBERYS MODEL
  • A short mathematical formalization of the problem
    is as follows
  • There is only one-way.
  • The intensity of the flow does not exceed the
    capacity of nodes.

19
DECISION VARIABLES
20
OPTIMAL STRUCTURE OF REGIONAL PARCEL CENTERS
  • 1002 Ljubljana and the Parcel Posts 1380
    Cerknica, 1230 Domale, 1290 Grosuplje, 1241
    Kamnik, 1330 Kocevje, 1270 Litija, 1370 Logatec,
    1215 Medvode, 1310 Ribnica, 1420 Trbovlje, 1360
    Vrhnika, 1410 Zagorje ob Savi
  • 4101 Kranj and the Parcel Posts 4270 Jesenice,
    4240 Radovljica, 4220 kofja Loka, 4290 Tric
  • 5102 Nova Gorica and the Parcel Posts 5270
    Ajdovcina, 5280 Idrija, 5220 Tolmin
  • 6104 Koper and Parcel Posts 6251 Ilirska
    Bistrica, 6320 Portoro, 6230 Postojna, 6210
    Seana and
  • 8101 Novo mesto and the Parcel Posts 8250
    Breice, 8340 Crnomelj 8270 Krko, 8290 Sevnica
    and 8210 Trebnje.

21
FLOW OF PARCELS
22
RESULTS
  • The results show that the travelling distance has
    been reduced by 32 per cent for the area that
    covers 70 per cent of Slovenia, patronized by PLC
    Ljubljana.
  • With a new transportation structure of sorting
    out and the retaining of parcels in the Posts,
    Parcel Posts and Regional Parcel Centres within
    their individual areas, the transportation costs
    can be reduced by 20 per cent.

23
CONCLUSION
  • We have evaluated whether the two existing Postal
    Logistics Centers in Slovenia are optimally
    located and have assessed the new transportation
    structure of Regional Parcel Centers and Parcel
    Posts.
  • The results show that the total transportation
    costs could be reduced by 943.224,00 per year.
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