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A Recursive Optimization/Simulation Procedure for Express Courier Service Network Design : Determination of Terminal Capacity and Cut-off Time  

Ko, Chang Seong (Department of Industrial Engineering, Kyungsung University)
Lee, Hee Jeon (Department of Industrial Engineering, Kyungsung University)
Publication Information
Journal of Korean Institute of Industrial Engineers / v.33, no.2, 2007 , pp. 282-289 More about this Journal
Abstract
While demands for express couriers service are rapidly increasing due to recent progress of electronic commerce, express courier service companies are struggling to take a larger market share through ongoing improvement in their service processes. Cut-off time is the time limit that all orders delivered before the limit are guaranteed for the delivery within the very next day. Extending cut-off time for express service centers can provide the express company with increase of total sales, but it may also cause increasing the possibility not to satisfy customer needs due to work delay in the consolidation terminal. We develop a design model for express courier service network based on a recursive optimization/simulation procedure. With the optimization model, we seek key design parameters such as the cut-off time for express service centers and the capacity of the consolidation terminal maximizing total sales profit while satisfying the desired level of performances. With the simulation model, we consider the dynamic nature of the network and obtain relationships between the design parameters and the performance measures with the multiple linear regression. The validity of the model is examined with an example.
Keywords
Express Courier Service Network; Cut-off Time; Capacity; Consolidation Terminal; Recursive Optimization/Simulation Procedure;
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Times Cited By KSCI : 1  (Citation Analysis)
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