INTEGRATED PLANNING OF LOCATION, ROUTING
AND ASSIGNMENT IN DELIVERY SERVICES
WITH COST AND WORKLOAD BALANCING CRITERIA
C K Y LIN AND C K CHOW
Department of Management Sciences, City University of Hong Kong, 83 Tat Chee Avenue,
Kowloon Tong, Hong Kong, China
Abstract
This study considers a real integrated problem involving long-term and short-term decisions in a
local telecommunication service company. Long-term decision includes the selection of delivery depot
sites (and printing offices) among its existing buildings to deliver mail to its customers in wellstructured and densely populated housing estates. Daily operational decisions include scheduling
routes from the selected depot sites to housing estates and assignment of routes to vehicles. The
criterion of total cost (composed of facility setup costs, vehicle rental, staff salary and operating costs)
is of primary concern to the company. Workload balancing for staff (load carried and working hours)
is also crucial in maintaining staff morale. Following on an earlier paper on the single cost objective,
several typical objectives in delivery services are considered in this work. Efficient frontier solutions
are produced. Exact results are used to assess the performance of a hybrid heuristic designed by
combining exact methods and metaheuristics of threshold accepting and simulated annealing. The
hybrid heuristic adopts a hierarchical approach to tackle the three phases of decisions iteratively: select
the locations in a greedy, exhaustive manner; determine the routes by metaheuristics; and assign routes
to vehicles by exhaustive enumeration or bin-packing algorithms. The heuristic approach is applied on
a larger problem with real data collected from the company. Results and computational time are
compared with the manual solution provided by the operation team. In anticipation of the increase in
mail volume and the number of housing estates in new developed areas, an efficient algorithm
considering both cost and employee equity will assist the company in making inter-dependent decisions
on facility location, routes generation and assignment. The integration of optimisation models with
real-time data and communication systems is likely to be important for the future logistics development
of the society.
Keywords: Location; Distribution; Multi-objectives; Heuristics