Green last mile distribution system: Heterogeneous fleet vehicle routing problem with time window and external cost

Abstract

The development of e-commerce business in Jakarta, Indonesia, in recent years has made the Last Mile Delivery (LMD) business sector develop rapidly. Increased demand for LMD makes the resulting kilometer trips even greater, resulting in negative externalities. On the other hand, logistics costs in Indonesia are only affected by vehicle operating costs and no external cost component. Optimization of LMD services that take into account internal and external costs is needed to minimize the total cost of LMD and in reducing the impact of negative externalities. The purpose of this paper is to optimize the LMD distribution system on the Heterogeneous Fleet Vehicle Routing Problem with Time Window and External Costs (HFVRPTW-EC) models. The optimization is done by applying the HFVRPTW-EC model using data from one of the parcel deliveries companies in Jakarta and then doing a simulation by forming several operational scenarios. The results show that the optimization of LMD has reduced internal and external costs by more than 50% compared to existing conditions. The detailed results show that, for the short-term program, a scenario with a one-tier distribution system and type of motorcycle vehicle can reduce total costs compared to existing conditions by 66.22% on a peak day and 59.41% on off-peak day. Whereas for long-term program optimization, scenarios with multiple tier distribution systems and types of motorized vehicles for drop mileage and pick up truck for stem mileage can reduce total costs by 69.23% on a peak day and 60.24% on off-peak day.