Solving a Real-World Urban Postal Service Network Redesign Problem

Abstract

Due to recent technological advancements, more diversified customer demand, and increasingly harder competition, traditional postal service systems have experienced significant changes all over the world. In Norway, through a strategic reform called post-in-shop, undertaken in 2013, most postal services are now provided at postal service counters located in retailer stores in order to improve accessibility, operational efficiency, and cost-effectiveness. This has led to a complex decision-making problem for the redesign of urban postal service networks across the country. In this paper, a two-stage method is proposed to solve a real-world urban postal service network redesign problem. First, two location models are employed to determine the optimal locations of postal service counters. In the second stage, a simulation model is built to evaluate the urban postal service system with different location and demand allocation plans under a realistic and stochastic environment. Among other insights, our results show that the proposed two-stage method can be used to effectively improve the accessibility of postal service networks by making optimal location-allocation decisions.