Integration of the Load-Matching and Routing Problem with Equipment Balancing for Small Package Carriers

Small package delivery is a multi-billion dollar industry with complex planning decisions required to efficiently utilize costly resources and meet tight time requirements. The planning process is typically decomposed into sequential sub-problems to establish tractability. This decomposition can greatly degrade solution quality. In this paper, we therefore consider the integration of two closely related key sub-problems: load matching and routing and equipment balancing. First, we identify critical challenges faced in trying to solve these problems. Then, we present a novel modeling approach to address these challenges. Finally, we conclude with computational results from UPS, the world’s largest package delivery company, demonstrating an improvement of approximately 5% over their existing methods for solving this pair of problems.