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

Industrial and Operations Engineering, University of Michigan, 2797 IOE Building, 1205 Beal Avenue, Ann Arbor, Michigan 48109
Industrial and Operations Engineering, University of Michigan, 2797 IOE Building, 1205 Beal Avenue, Ann Arbor, Michigan 48109
Industrial and Operations Engineering, University of Michigan, 2797 IOE Building, 1205 Beal Avenue, Ann Arbor, Michigan 48109
United Parcel Service, 2311 York Road, Timonium, Maryland 21093
amy.cohn{at}umich.edu
seroot{at}umich.edu
azncanon{at}umich.edu
dmohr{at}ups.com

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.

Key Words: package delivery; service network design; integrated transportation planning; large-scale optimization; branch and price; optimization
History: Received: July 2005; revised: March 2006; accepted: June 2006.