E10: IEOR Module
Optimization Research Project
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.
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: