Selecting The Optimal transport Solution between Mail Centres of the South African Post Office

Abstract

The South African Post Office is currently experiencing a decline in its mail volume, caused by the recent increased use of telecommunication technologies. This decline in volume makes a significant contribution to the declining revenue of the Post Office, as the majority of the revenue is generated by the Mail business department. Transportation cost accounts for most of the logistics cost, therefore improving the transportation system will create an economic opportunity and provide competitive advantage as transportation drives the supply chain. This project focuses on reducing the transport cost of traveling between the Mail Centre s (Hubs). The problem at the South African Post Office has been solved by developing a mixed integer linear mathematical optimization model. The purpose of this model is to select between transportation modes such as road transportation, air transportation (intermodal road-air) and rail transportation (intermodal road-rail). The model further specifies the volume of mail to be transported by each transportation mode. The South African Post Office measure the success of a business activity through using a scorecard that measures economic, environmental and operational performance, for this reason the model developed is a multiple objective model which minimizes cost, operation time and carbon emissions. Preemptive goal programming is used to solve the model where cost was optimized first, followed by operation time, then carbon emission. The model proposed provides a cost saving of R64 355 610 per-year and operation time savings of 2496.93 hours per year. Although the model provides an increase in carbon emission of 10.36 Kg/letter per year when compared to the current transportation system that only uses road transportation, the model provides a reduction of 27 percent in trucks on main roads, improving the traffic congestion problem faced in South Africa.