M.Sc Thesis

M.Sc StudentSpiegler Anat
SubjectEvaluating the Effectiveness of Constructing a Network
of Local Pick-Up Centers as a Solution for
the Logistic Last-Mile Problem
DepartmentDepartment of Industrial Engineering and Management
Supervisor PROF. Boaz Golany


In recent years there has been a growing recognition that the main challenge of B2C
E-commerce is no longer the information technology aspect of the operations. Rather, it is to develop a delivery process that will enable the retailers to deliver the goods to their customers in a satisfactory manner. The major obstacle in this procedure is the so-called “Last Mile”: i.e., the last leg of the trip before the package arrives to its final destination.
This research proposes the concept of local pick-up centers (LPCs) as a solution for the Last Mile problem. The package will be delivered to one of the LPC facilities that were chosen by the customer. The customer will be notified when the package arrives to the LPC and it will be the customer’s responsibility to pick up the package.
We focus only on the aspects related to the network design issues in order to evaluate the economic effectiveness of the proposed solution.
The proposed procedure for the assignment of the customers to the LPCs is based on their preferences, rather than on the common criterion in the literature, namely the distance between the demands nodes and the customers.
We propose a mixed-integer programming model for solving the LPC location-size problem, based on the Scenario Planning method.
An experiment was conducted in order to evaluate the economic effectiveness of the proposed solution. The experimental results reveal that under a reasonable range of parameter values, the proposed solution is more effective than the current delivery procedure.