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Simulation-optimization approach for multi-period facility location problems with forecasted and random demands in a last-mile logistics application

Abstract:

The introduction of automated parcel locker (APL) systems is one possible approach to improve urban logistics (UL) activities. Based on the city of Dortmund as case study, we propose a simulation-optimization approach integrating a system dynamics simulation model (SDSM) with a multi-period capacitated facility location problem (CFLP). We propose this integrated model as a decision support tool for future APL implementations as a last-mile distribution scheme. First, we built a causal-loop and stock-flow diagram to show main components and interdependencies of the APL systems. Then, we formulated a multi-period CFLP model to determine the optimal number of APLs for each period. Finally, we used a Monte Carlo simulation to estimate the costs and reliability level with random demands. We evaluate three e-shopper rate scenarios with the SDSM, and then analyze ten detailed demand configurations based on the results for the middle-size scenario with our CFLP model. After 36 months, the number of APLs increases from 99 to 165 with the growing demand, and stabilizes in all configurations from month 24. A middle-demand configuration, which has total costs of about 750, 000e, already locates a suitable number of APLs. If the budget is lower, our approach offers alternatives for decision-makers.