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Executive Summary:
The United Parcel Service was established in 1907 as a messenger and
delivery service in the Seattle area. During the past century, the
company has expanded into a 30 billion dollar corporation that spans the
entire globe. UPS has become the world’s largest package delivery
company and the leading provider of logistics services.
On a regional scale, large volume customers are serviced through local
trailer delivery and pick-ups (TDP). Tractor-trailers based at a local
distribution center make deliveries and pick-ups throughout the day.
These day to day operations incur costs associated with route mileage,
the number of trucks and trailers required, and driver hours. It is
critical for UPS to minimize these costs so that their operational
efficiency is maximized. The main goal to increase savings will be
achieved by maximizing efficiency which will ultimately result in
increased profits for UPS.
The assembled Team of three industrial engineers and one mechanical
engineer has been charged with the optimization of UPS’ TDP for the
Allentown Distribution Center. The Team examined UPS' current practice
and focused on the aforementioned operational costs to formulate two
optimized routings which will increase UPS’ profitability in this
region.
The Team has constructed a matrix that contains all the distances and
times between each delivery/pick-up location. Also, a customer database
was created which contains such information as customer locations,
whether they require delivery or pick-up, the stop times, and how many
packages are delivered or picked up. The Team has entered all customer
locations into Microsoft Streets and Trips and has replicated the TDP
schedules for each driver.
Two different routing scenarios were ultimately created. The first
changes stop orders for applicable drivers, thus creating an optimized
routing path. The second routing consists of redistributed stops to the
drivers. This second routing is based on driver territories as well as
shifting the driver balance between deliveries and pick-ups so that
fewer drivers are required. This is the most optimized routing
resulting in the greatest cost savings.
Aside from creating
new routings that will reduce operating expenses for the Allentown
facility, the Team has
provided its algorithm so that UPS can use it to optimize routings for
other areas’ TDP facilities.
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