Scribd
Upload
191 views3 pages

Optimizing Delivery Costs with Linear Models

This document discusses a transportation case study involving locker delivery optimization. It contains the following key points: 1) A linear optimization model was created to minimize shipment costs by determining the best courier for each zip code for standard and premium services. The model aims to find the optimal solution while meeting total demand constraints. 2) Parameters like revenue, rental costs, delivery times, and location hours were considered to evaluate options based on consumer convenience, ease of collection, and profitability. 3) The two most important negative factors affecting adoption rates were identified as variable locker opening times across days of the week, and higher customer returns for lockers with low adoption rates.

Uploaded by

eeshachtr
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
191 views3 pages

Optimizing Delivery Costs with Linear Models

This document discusses a transportation case study involving locker delivery optimization. It contains the following key points: 1) A linear optimization model was created to minimize shipment costs by determining the best courier for each zip code for standard and premium services. The model aims to find the optimal solution while meeting total demand constraints. 2) Parameters like revenue, rental costs, delivery times, and location hours were considered to evaluate options based on consumer convenience, ease of collection, and profitability. 3) The two most important negative factors affecting adoption rates were identified as variable locker opening times across days of the week, and higher customer returns for lockers with low adoption rates.

Uploaded by

eeshachtr
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Transportation Case Abc Locker Delivery: Experience Convenience

Question 1:
This question was solved using the techniques of linear optimization. This is a transportation
Problem.
The linear optimization model was created to minimize the costs shipment.
The answers are as shown as in the table below. The optimization model has been explained
following the answer. Detailed calculations are enclosed in appendix 1.

Carrier
Base
Ease
Base
Case
Dase
Base
Base
Base
Chase
Dase

Postal
Code
1xx
2xx
3xx
4xx
5xx
1xx
2xx
3xx
4xx
5xx

Shipment
Option
Standard
Standard
Standard
Standard
Standard
Premium
Premium
Premium
Premium
Premium

No.
Packages
875
764
803
789
769
775
789
803
827
806

of Total
Cost
67074.88
48439.89
104249.5
53358.49
54582.08
96485.18
113329.6
152910.5
123538.9
123293

Linear Optimization Model


Objective :
To find out the best courier for each zip code ( split by standard and premium service) keeping the total
costs of shipment minimum.
Constraint :
Total demand at each of the Pin Code.

Team Kainomoto/Members: Eesha Chaturvedi, Mohit Monga, Ranjiv Ravi


Indian School of Business

Page 1

Question 2:
Parameter
Revenue
Rental Cost
Ship to Deliver
Location hours
Ship Charge

Rank
1
2
3
4
5

The Parameters are chosen considering consumer convenience, ease of collection, and
profitability to Abc.

Revenue: as the costs will have to be such that the operations are profitable.
Rental Cost, Ship Charge: Ensures the most cost effective places are selected so that the
savings can be passed on to the customer. The key to providing a low price product is to
work on low cost structures.
Ship to deliver: Ensures the consumer gets the product on time and concessions are
minimized.
Location hours: ensures the customers can collect at a time most convenient to them.

Question 3:
Two most important factors affecting the adoption rate negatively are mentioned below. The
detailed analysis supporting these is enclosed in appendix 2 under the tab Final analysis.
1) The variability of the locker opening times across the week: The lockers that were open at
different times at different days in the week showed a much greater percentage of less than
1% and between 1-5% adoption, as indicated in Figure 1 below. This shows that lockers that
operate 24 hours a day, and the lockers that operate on fixed times everyday of the week
seem to be doing better.

Team Kainomoto/Members: Eesha Chaturvedi, Mohit Monga, Ranjiv Ravi


Indian School of Business

Page 2

2) Customer returns: The lockers where the adoption was less than 1% and between 1-5%
showed the maximum customer returns. The numbers are as shown in the table below.

Team Kainomoto/Members: Eesha Chaturvedi, Mohit Monga, Ranjiv Ravi


Indian School of Business

Page 3

You might also like