Decision Sciences Journal
Volume 31, Number 1
Winter 2000
An Integrated Decision Methodology for Designing and Operating
an Air-Express Courier’s Distribution Network
Lawrence C. Leung and Waiman Cheung
Decision Sciences and Managerial Economics, Business Administration,
The Chinese University of Hong Kong, Shatin N.T., Hong Kong,
email: lawrence@baf.msmail.cuhk.edu.hk
ABSTRACT. DHL, an international air-express courier,
has been operating in Hong Kong for many years. In 1998, the
new international airport located at a site considerably distant
from the old location opened in Hong Kong (HK). Other airport-related
infrastructure facilities have also been developed or are being
developed, resulting in major changes in transport structure
as well as a shift in customer demand. In this paper a multiyear
distribution network is designed for DHL(HK) using an integrated
network design methodology, which consists of a macro model and
a micro model. The macro model, a mixed 0-1 LP, determines in
an aggregate manner the least-cost distribution network. The
micro model, a simulation, evaluates the operational viability
and efficacy of the network according to its service coverage
and service reliability. We also illustrate how coverage and
reliability can be improved via the integrated use of the two
models. Extensive discussion on relevant planning and operational
issues of an air-express courier are included. The methodology
has been successfully implemented at DHL(HK). It has been used
to design the network, to test strategic decisions, and to update
the network.
Subject Areas: Air-express Courier, Distribution Network,
Mathematical Programming, Service Operations, and Simulation. |