A study on strategic partership-based cutoff time adjustment for express package deliveries

The market competition of express package deliveries in Korea is severe because a large number of companies have entered into the market. Under the competitive business environment, it is helpful for a company to consider how to economically operate the consolidation terminal and its corresponding service centers. In general, each company owns and operates a number of service centers in order to achieve high level service for the country-wide coverage even though some service centers cannot create profits due to low volume and under-utilization as cost centers. Such strategy is not good option for companies involved so that strategic partnership particularly in the same service districts can be an alternative way to get win-win goals while maximizing the overall operating efficiency of express service networks. Therefore, this study suggests an approach to the reconfiguration of express service networks with respect to strategy partnership of closing/keeping service centers among companies involved and adjustments of their cutoff times. For this we propose an integer programming model and a genetic algorithm based solution procedure for allowing companies involved to maximize their incremental profit. An illustrative numerical example in Korea is presented to demonstrate the practicality and efficiency of the proposed model.