decision analysis partners conducted an extensive simulation of the USPS mail processing and transportation network for an undisclosed client. The objective was to evaluate the impact of network restructuring based on 2020 projected mail volumes and changes in product-mix. We developed a postal network distribution model to evaluate alternative distribution strategies. This included quantifying the impact on operating costs and projected service performance. The model tested various hypotheses based on:
- varying the service areas assigned to processing centers,
- re-dimensioning processing centers to optimize labor costs, and
- relocating (when feasible) the processing centers to minimize time in transit and related transportation costs.
Agent-Based Network Simulation
The model also tested three main distribution strategies consisting of:
- shortest-path of travel
- hub and spoke distribution, and
- hybrid distribution strategies including a mix of shortest-path and hub & spoke.
dap used state of the art agent-based modeling technology to develop the model and to test the effect of the various hypotheses on operating costs, and service performance. The model relied on USPS labor costs for key mail processing operations and of transportation costs based on available data. The results provided a directional understanding of the impacts of a number of restructured network configurations.