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. D HL, an international air express company, serves over 220 countries around the world. Its worldwide operations network consists of over 40,000 employees, 1,900 international service stations , 30 regional gateways, and 28 international sorting hubs. DHL's fleet of 177 aircraft and 11,000 vehicles transports millions of customers' packages daily. In addition to the hub-and-spoke routings of the company's own aircraft, DHL also uses commercial flights extensively for direct point-to-point transport. Established in San Francisco in 1969, DHL's major markets are in Europe and the Asia Pacific (AP) Region. Within the AP Region, DHL is a leading carrier in terms of total volume , with Japan, Hong Kong, and Singa-pore as its three largest subregions.