Improving network design through demand analysis for an express package delivery company

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Purolator, a Canadian company offering express package delivery services, has to improve its operations on a continuous basis in order to satisfy its customers, while maintaining its efficiency in the face of ever-growing challenges such as fierce competition and the expansion of e-commerce services. The company is particularly interested in the analysis of alternative ways to perform its operations that would reduce its costs, while improving its quality of service. These alternative approaches would involve reconfiguring its current network of facilities. This six-month Engage project is a first step in this direction. We will focus on the local area network of Montreal. We will first analyze the demand using data from the last years made available to us by the company. This will allow us to characterize trends over space and time (within each week and within each year) and to identify opportunities for better usage of the available capacity. We will assume that there is only one regional hub with a known location and a number of existing terminals. As part of the Engage project, we will analyze scenarios that involve reconfiguring the terminals, specifically closing some of them and relocating their operations to the hub or to other terminals. To this end, we will develop a mixed-integer programming model representing the facility location decisions in a "flexible" hub-and-spoke network, where terminals can be closed and their operations relocated.