Robust optimization of internal transports at a parcel sorting center operated by Deutsche Post World Net

Competitiveness in global markets requires the ongoing identification and full utilization of improvement potential. To cut costs by means of process optimization, logistics service providers need to focus on efficient planning - not only for external but also for internal transports. This contribution will demonstrate that significant reductions in internal transports at one of the Deutsche Post World Net's main parcel sorting centers can be achieved by applying the robust solution of a modified three-dimensional linear assignment model. The proposed MILP model minimizes necessary manual transportation effort by layout modifications. Additionally, it takes into account the specific characteristics and requirements of the parcel sorting center. The large-scale model is hierarchically decomposed and all resulting models are solved using MILP software. Uncertain data concerning the structure and quantities of transportation demand over time are considered adequately by applying robustness criteria. The transportation effort of the robust solution is close to every scenario-optimal objective value. The achieved reduction of manual transportation effort leads to a significant increase in runtime quality, to a decrease in costs and to a balanced utilization of the sorting and distribution unit. The approach proposed is not only valuable for parcel sorting centers operated by Deutsche Post World Net; it can also be generally applied to develop robust solutions in an uncertain dynamic decision situation. (C) 2009 Elsevier B.V. All rights reserved.