Recent Advances in Strategic and Tactical Planning of Distribution Subnetworks for Letter Mail

Abstract

This paper considers the postal logistics area, more precisely, the distribution networks for letter mail. A main service provided by postal companies is letter mail transportation and delivery. In this market segment there have been two key efforts during the last few years: reduction in transportation and delivery time (service quality) and minimization of costs under service quality constraints. Both efforts—reduction of service time and minimization of costs for providing the promised services—have a strong impact on the quality of the strategic and the tactical planning phases of the respective distribution networks. The Operations Research type of analytical models used in the strategic and tactical planning phases of distribution networks in postal organizations are: facility location, location routing, service networks design, and vehicle routing and scheduling models. In this article we introduce the structure of a typical distribution network for letter mail and for parcel mail, and we describe the main subnetworks. This paper is also concerned with projects on optimization of such subnetworks. Therefore, we have selected three projects dealing with different subsystems and covering the strategic and the tactical planning phases as well. The projects are in the areas of collecting mail from mailboxes (vehicle routing), replanning of delivery station locations (facility location combined with vehicle routing), and reducing deadheading in the last mile (facility location combined with vehicle routing). Each of the projects covers system analysis, modeling, development of optimization algorithms, and a software prototype.