Optimal Transfer Point Locations in Two-Stage Distribution Systems

Limited range of emerging delivery vehicles, specifically unmanned aerial systems, creates gaps in last mile retail distribution networks and excludes significant numbers of potential customers. Implementing a two-stage distribution process is one approach that eliminates this deficit. However, dispatchers must load the vehicles hauling orders in the initial stage of the process and assign orders for delivery to transfer points in a way that ensures timely arrival while utilizing only the minimum required resources. This paper investigates the capacitated transfer point covering problem which has, until now, been unstudied. The research proposes a mathematical programming model to provide an optimal solution. The model is then applied to a realistic delivery situation using a distribution case study on the eastern coast of the U.S. and solved using a commercial optimization software. The results are analyzed, insights provided, and areas are identified for future research.