Intramarket Optimization for Express Package Carriers

The flow of packages and documents in collective groups, called splits, of an express package carrier consists of picking up the packages by a courier at customers' locations and bringing them to a station for sorting. Next the splits are transported, either in bulk or containerized conveyances, to a major regional sorting facility called the ramp. In this work we focus on the afternoon and evening operations concerned with stations and the ramp. We deal with the sorting decisions at the stations and the ramp, as well as the transportation decisions among these locations. We model these processes by means of a dynamic program where time periods represent time slices in the afternoon and evening. The resulting myopic problem is a linear mixed-integer program. The overall model is solved by approximate dynamic programming where the value function is approximated by a linear function. Further strategies are developed to speed up the algorithm and decrease the time needed to find feasible solutions. The methodology is tested on several instances from an international express package carrier. Our solutions are substantially better than the current best practice.