Approaches to solving the express shipment service network design problem

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Ruckle, Leah Josefine
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Express shipment, the delivery of same-day, overnight and two-day packages, is a multi-billion dollar industry in the United States and abroad. It has become an essential part of business operations and, with the rise of e-commerce, an expectation of the everyday consumer. Express package delivery is challenged by tight service guarantees, the huge volume of material that must be moved in a multimodal network, and the large geographical area of service. These challenges necessitate the use of large jet aircraft fleets, thus prompting the desire of package deliver companies to use these aircraft as efficiently as possible. In this dissertation, the express shipment problem can be mathematically modeled as a variant of the Service Network Design Problem called the Express Shipment Service Network Design problem (ESSND). For realistic problem instances, finding high-quality solutions to the resulting mixed integer linear program (MIP) using a monolithic approach often requires long runtimes. This dissertation explores the effectiveness of two decomposition-based solution approaches to solving the ESSND, a heuristic decomposition approach which is developed in this work, and Benders decomposition which is an exact decomposition approach. It is hypothesized that one of these two approaches will be capable of producing solutions of comparable quality to the baseline monolithic approach in significantly less time. The Benders decomposition approach is found to be unsuccessful in providing better solutions to the ESSND in less time that the monolithic approach, but the heuristic decomposition approach is successful. Several heuristic decomposition algorithms are developed using guidance, in part, from the field of Multidisciplinary Design Optimization. The best of these heuristic decomposition algorithms, the Improved Sequential Algorithm, was found to be capable of finding, in one hour, solutions of better quality than the monolithic approach found in two days. Additionally, sensitivity studies found that it consistently out-performed the monolithic approach on a variety of problem instances. This substantial improvement in the ability to solve express shipment problems has the potential to dramatically change how express shipment companies make decisions across all levels of their business, and could have an impact ranging in the millions of dollars or more.
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