An application of sizing service territories

The major tradeoff in designing a service network, where facility-based delivery people travel to customer sites, is the variable cost of delivery versus the fixed cost of facilities. In many applications, reduced travel time, due to a larger number of facilities, increases the efficiency of the delivery people, thereby requiring fewer of them. Using techniques developed for related problems, the authors developed a model for evaluating and applying this concept, and used it as the basis for decision support systems for several applications. This article describes the model and its application developed for the United States Postal Service.