Strategic service network design for DHL Hong Kong

We developed a two-phase network planning methodology to design a service network for DHL(HK) based on two measures of service performance: service coverage and service reliability. The methodology consists of first using an optimization model to determine a least-cost distribution network, which forms the basis of a simulation model for analyzing the network's operational characteristics. It takes into consideration such design issues as inbound and outbound shipment, equivalent shipment, cutoff time, demand fluctuation, and random behaviors. DHL decision makers can now examine trade-offs between coverage and reliability by adjusting workforce, changing cutoff time, or redesigning the service network.