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Last Mile Innovation: The Case of the Locker Alliance Network

Alumni and External Relations Office    2019-10-21

Last Mile Innovation: The Case of the Locker Alliance Network

Speaker: Dr. Guodong Lyu, National University of Singapore

Host: Associate Professor Song Yingda

Time: Wednesday, October 30, 2019, 10:00-11:30

Venue: A511, Antai Building

 

Abstract:

Under the smart nation initiative, the Singapore government has recently proposed the concept of “Locker Alliance” (LA), an interoperable network of lockers in residential areas and train stations, to improve the efficiency of last mile parcel delivery operations. This is to complement the existing locker infrastructure, comprising mainly of proprietary lockers in commercial areas by a few large players.  How do we design the LA and what proportion of the parcels in Singapore will be shifted to the LA?  These are key questions to address before the nation-wide implementation. In this work, we focus on the issues of network design and determine the appropriate coverage of the LA lockers. The problem is complicated by the fact that customers can pick up parcels either from the lockers near their homes or their work places. Without knowing the home-work office information of each customer, it is challenging to design the LA network to ensure that its utilization will be maximized.

We use a set of locker usage data from a proprietary system to calibrate a locker choice model, and use the observed delivery profile (without LA) to develop a facility location model for the network design problem.  To solve the large-scale facility location problem, we propose an exact SOCP-MIP reformulation to this problem.  We show that the volume of parcels delivered to the lockers, obtained without considering the issue of demand endogeneity, is a lower bound to the case when we factor in demand endogeneity. Contrary to conventional wisdom, our model may not always place lockers near areas with peak parcel volume because of demand endogeneity. Using real data provided by the government agency and industry players, we show that with a well-chosen LA Network, the volume of parcels delivered into CBD can be reduced by at least 7.5%. This will in turn contribute to a more sustainable city logistics ecosystem.

 

Bio:

Dr. Guodong Lyu graduated from National University of Singapore. Research interests include online optimization and robust optimization, with potential applications in supply chain management and logistics, ride-sharing, online retailing, humanitarian logistics, and  revenue management. As a Co-PI, he is participating in a smart nation project, and focus on smart and sustainable city logistics ecosystem. In this talk, he will present a work related to the smart nation project.