Model and Algorithm for Hub Location Problem in Selected Courier Company

Abstract:

The paper includes a description, formulation, and method of the solution to a certain problem related to the optimization of the structure of parcel distribution system in a chosen logistics company.    It was assumed that the parcels should be generated in the zip code areas (more precisely - we know the shipment volume between each pair of zip codes in a time profile (day/week/month/year)). The issue of the system structure optimization is decomposed into two sub-issues: (1) location and dimensioning of the company’s branches by optimizing the number, location, capacity of the branches and allocating zip code points to be serviced by the branches. The optimization criterion is the total cost of establishment and maintenance of the branches as well as the cost of transporting of the parcels from zip code points to the branch and vice versa; (2) location and dimensioning of the sorting plant and determination of the transport plan. The issue number (1) was solved using a modified randomized method for k-means clustering on the current data on the structure and volume of shipments from a certain courier company. The results of the research based on the real data have been described.