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Highway Optimization Research Paper

Highway Optimization Research Paper - 1 E10 IEOR Module...

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1 E10: IEOR Module Professor Righter 03.18.08 Optimization Research Project Overview The United States Postal Service (USPS) is a large transportation network which runs some of the most complicated and challenging logistical processes. An analytical model known as the Highway Corridor Analytic Program (HCAP) aims to identify cost-savings opportunities and solves vehicle-routing problems with pickups and deliveries. Using a graphical interface, HCAP facilitates the modeling process, which allows USPS to identify near-term savings opportunities. Through this model, USPS has already had transportation savings over $5 million annually. The Problem With USPS shipping over 200 billion pieces of mail each year, shipping logistics isn’t the only problem that needs to be taken into consideration. USPS had many different types of mail, such as letters, flats, parcels, etc., as well as different characteristics for each type. These different characteristics determine the processing requirements. For example, since letters and flats are different shapes, sizes, and weights, there needs to be a specialized processing operation that accommodates for the differences. On top of this, USPS offers different mail classes including priority, first-class (further sub-divided into overnight, 2-day, and 3-day), and standard. These different mail services have their own service standards which define the delivery time frame for the package. Already, USPS’s system seems complicated, but it becomes more intricate when it comes to transportation. USPS has created different transportation networks: bulk mail network (BMCs), surface transfer centers (STC), and processing and distribution centers (P&DCs). BMCs transport bulk mail like standard parcels and periodicals, STCs collects mail in high volumes for bulk shipping, and this mail is carried among the smaller P&DCs. There are also networks like the PMPCs which processes priority mail and the AMCs which are air mail centers. Though there are many networks, they do not work in isolation as significant overlap is visible. Mail often transfers through many different networks before shipping. These multiple intertwined networks create the problems USPS transportation faces. Averaging over 75,000 trips over 30,000 facilities in its highway transportation network on just an average weekday, it can be readily seen that fixing the overlaps within these networks would be helpful. ABCs of Optimization Problem A: Adjustable – Decision Variables Facilities where mail is delivered and received Volume of mail that needs to be delivered between facilities Trips or routes for transporting deliveries (Note: Each trip is composed series of legs. Direct trips have one leg. Multi-stop trips have >1 legs. B: Objective Function: Minimize Cost: “total cost of routing the deliveries on the available trips is minimized over all feasible assignments of deliveries to trips” (518) To evaluate alternate solutions, the following requirements were implemented: o Solutions time: solution must be approx. 1% within optimal (“near optimal”)
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