United Parcel Service (UPS): Optimizing the “Smalls Cut-off”
Student Team
Stephen Cai, Allison Chan, Amy Chan, Se W. Chang, Christine Chuang, David Dongkuen Kim, and Derek von Zweck
Faculty Advisor
Anton Kleywegt
The objective of the project was to analyze the effects of separating packages into small and large packages, and to recommend cut-off dimensions that minimize total cost. A 3D bin packing algorithm was developed to simulate the loading of packages into trailers. A mixed integer program was used to calculate the optimum number of trailers needed on each route, on each day. By selecting the smalls cut-off that optimizes the trade-off between handling costs and transportation costs, UPS would realize cost savings of $17,000 daily at a terminal.
Spring 2011