A hybrid hub-and-spoke postal logistics network with realistic restrictions: A case study of Korea Post

Postal logistics has a complex transportation network for efficient mail delivery. Therefore, a postal logistics network consists of various functional sites with a hybrid hub-and-spoke structure. More specifically, there are multiple Delivery & Pickup Stations (D&PSs), multiple Mail Processing Centers (MPCs), and one Exchange Center (EC). In this paper, we develop two mathematical models with realistic restrictions for Korea Post for the current postal logistics network by simultaneously considering locations and allocations. We propose an Integer Linear Programming (ILP) model for transportation network organization and vehicle operation and a Mixed Integer Linear Programming (MILP) model that considers potential ECs for decision making while simultaneously regarding the EC location, transportation network organization, and vehicle operation. We use modified real data from Korea Post. Additionally, we consider several scenarios for supporting EC decision makers. The proposed models and scenarios are very useful in decision making for postal logistics network designers and operators.