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Article Excerpt
The United States Postal Service (USPS) delivers more than 200 billion items per year. Transporting these items in a timely and cost-efficient manner is critical if USPS is to meet its service and financial goals. The Highway Corridor Analytic Program (HCAP) is a tool that aids USPS transportation analysts in identifying cost-savings opportunities in the surface-transportation network. By using HCAP, USPS has saved millions of dollars annually.
Key words: parcel industry; transportation network; large-scale integer programming; decision-support systems.
History: This paper was refereed.
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The transportation network of the United States Postal Service (USPS) is large and complex; accordingly, the transportation-planning process is an important and challenging component of USPS logistics. The recently developed Highway Corridor Analytic Program (HCAP) assists in this process. HCAP is an analytical model that aids USPS transportation analysts in identifying cost-savings opportunities within the surface-transportation network. We designed the HCAP model to solve the vehicle-routing problem with pickups and deliveries (VRP/PD) by utilizing mixed-integer programming as the underlying optimization engine. The HCAP model incorporates a graphical user interface to facilitate the modeling process. Using existing data sources, it enables USPS to identify near-term savings opportunities. We developed and fully tested the model, and then deployed it to transportation analysts in USPS headquarters and regional area offices. USPS has implemented many HCAP model recommendations and has already realized annual transportation savings of over $5 million. It is currently reviewing additional savings opportunities.
Background
USPS operates one of the largest and most complex logistics networks in the world, delivering more than 200 billion pieces of mail each year. Its surface-transportation network comprises many different networks, each designed for a specific purpose. USPS also delivers many different types of mail, including letters, flats (e.g., large envelopes for unfolded documents), parcels, and periodicals. Each type has different characteristics; these determine the processing requirements. For example, because letters, flats, and parcels have different sizes, shapes, and weights, there is a need for specialized processing operations to accommodate the differences. USPS also offers several different mail classes, including priority, first-class (overnight, 2-day, and 3-day), and standard. Each mail class has specific service standards that define its overall delivery time frame. To accommodate its various type and class options, USPS has established different transportation networks. For example, the bulk mail network transports bulk mail (e.g., standard parcels and periodicals) through bulk mail centers (BMCs); the surface transfer center (STC) consolidates mail to aggregate volumes; interplant transportation carries mail among processing and distribution centers (P&DCs); priority mail is often trucked to priority mail processing centers (PMPCs) for priority processing; and time-critical mail (e.g., express mail and some first-class and priority mail) is trucked from P&DCs to air mail centers (AMCs) to enter the air transportation network. Figure 1 shows a representative map.
USPS designed each of these transportation networks to serve a particular purpose. However, the networks do not operate in isolation; significant overlap and redundancies exist among them. For example, inter-P&DC transportation may stop at a BMC, en route between P&DCs, to get bulk mail from the origin P&DC into the bulk mail network. Similarly, STC transportation may additionally stop at P&DCs to pick up and drop off inter-P&DC mail along the STC route. These multiple, intertwined transportation networks create significant complexities and challenges to USPS transportation planning. The transportation network's vast size further complicates the planning process. On an average weekday, USPS may dispatch over 75,000 trips among over 30,000 facilities (including processing facilities, post offices, and other facilities) in its highway transportation network. USPS employs a variety of advanced analytical tools and techniques to address the challenges of managing such a large and complex network.
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Objectives
The HCAP model serves as an analytical tool to help USPS identify opportunities to reduce surface-transportation costs while maintaining on-time delivery. The tool serves and assists USPS in analyzing its surface-transportation routing and scheduling. The model is intended to be sufficiently flexible to allow USPS to apply it to a wide range of components within its transportation network. For example, USPS might apply the model to problem sets that include BMCs, STCs, P&DCs, AMCs, and a variety of other transportation applications. USPS could apply it to individual geographic regions of the nation (e.g., all processing facilities in the northeast corridor), or to a single transportation network nationwide (e.g., all BMCs), provided that the size of the network being considered is suitable for the HCAP model (see the Modeling and Solution Approach section for details).
Although we designed the HCAP model to be applicable to a wide variety of transportation networks, we also designed it to solve a standard problem. A problem must be defined by a set of delivery requirements among a set of facilities, and a set of feasible transportation resources to transport those deliveries. The HCAP model optimizes the transportation of the given set of delivery requirements, considering the potential transportation options that can fulfill those delivery requirements. Therefore, it is necessary to define, for each problem application, the specific delivery requirements and potential transportation options available. Delivery requirements may include both pickup and delivery requirements among a set of facilities that involves multiple types of mail with various service commitments.
The objective of the HCAP model is to optimize the existing transportation network; that is, the model identifies opportunities to modify existing USPS transportation to reduce costs. Although its objective is not to generate completely new transportation networks, the model can consider new transportation options. It is possible to generate new transportation alternatives using heuristics or operational insights, and incorporate them as potential options that the HCAP model may select when optimizing the network. The...
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