A Study on Network Optimization of Parcel Service Industry

Jo Yonghun; Park Dongjoo; 박형준; 박찬익; 엄인섭

doi:10.15793/kspr.2012.72..006

Recently, an explosive growth in electronic commerce, telemarketing, and TV home shopping industries has brought an increase of consumer's need of direct shipment of purchased goods by parcel service. Although there exist a countless number of different starting points and destinations in the parcel service, to build an efficient hub network is important in aspects of not only speedy pickup and delivery but also operational cost. However, most of all companies made decision on the optimum number of distribution centers, their locations and sizes, and network strategy without any detailed analysis procedures. They made decisions by using traditional experiences. The purposes of this study are to build a mathematical model that could reflect the characteristics of cargo transportation and transportation economies of scale and to apply the model to the domestic express parcel service industry. It is assumed that parcel delivery service used less than two hub terminals as its analysis target and the hub network designed to make a single allocation. In addition, this study applied the model to the LINGO, an optimization package, after using the Heuristic method, which is to simplify a network by grouping into sub-terminals.

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