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                               Simulation & Optimization of the United
AT A GLANCE:                   States Postal Network Infrastructure
D/AP DEVELOPED A STATE-OF-
THE-ART SIMULATION MODEL       SITUATION
OF THE USPS OFFICE OF          The Postal Service processing and transportation (P&T) network infrastructure
INSPECTOR GENERAL TO           is at a crossroads, following decades of mail volume growth and breakthrough
EVALUATE FACILITY              improvements in processing technology. With mail volumes predicted to drop
CONSOLIDATION SCENARIOS.       over the next decades and mail patterns continuing to evolve, the USPS Office
                               of Inspector General tasked decision/analysis partners (d/ap) with conducting a
THE ANALYSIS SHOWS             stakeholder survey and with developing an analytical model designed to
THAT SIGNIFICANT
                               evaluate first order P&T infrastructure scenarios using forecasted mail
                               volumes.
CONSOLIDATION CAN BE
ACHIEVED THAT WOULD
PROVIDE SIGNIFICANT            APPROACH
SAVINGS IN PROCESSING          d/ap conducted key interviews in the mailing industry, and developed a
COSTS UNDER CERTAIN            complex simulation model using Symphony REPAST, an open source
DISTRIBUTION CONCEPTS.         application. The model follows these steps:

                                   A pre-processor sets a number of plants and hubs across the U.S.
                                   as part of scenarios.

                                   For each scenario, the model routes forecasted mail through
                                   facilities to destination while evaluating a number of distribution
                                   concepts (mesh, hub-and-spoke).

                                   Labor costs are determined as a function of the volume of mail and
                                   labor productivity in each facility, and added to transport costs.


                               RESULTS
                               The analysis conducted with the simulation model shows that the number of
                               Postal Service letter and flat processing plants could be substantially
                               consolidated to attain significant lower processing costs with minimal impact
                               on service performance. Compared to today’s 269 plants and 21 hubs, a
                               scenario with 82 plants and 11 hubs shows minimum cost with some service
                               degradation. A scenario with 172 plants and 18 hubs shows almost no service
degradation. According to stakeholders, an opportunity exists through
network consolidation to better align services offered with network capabilities
to ensure that each service’s speed and reliability are achieved.




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Case study network simulation for oig

  • 1. ttrt Simulation & Optimization of the United AT A GLANCE: States Postal Network Infrastructure D/AP DEVELOPED A STATE-OF- THE-ART SIMULATION MODEL SITUATION OF THE USPS OFFICE OF The Postal Service processing and transportation (P&T) network infrastructure INSPECTOR GENERAL TO is at a crossroads, following decades of mail volume growth and breakthrough EVALUATE FACILITY improvements in processing technology. With mail volumes predicted to drop CONSOLIDATION SCENARIOS. over the next decades and mail patterns continuing to evolve, the USPS Office of Inspector General tasked decision/analysis partners (d/ap) with conducting a THE ANALYSIS SHOWS stakeholder survey and with developing an analytical model designed to THAT SIGNIFICANT evaluate first order P&T infrastructure scenarios using forecasted mail volumes. CONSOLIDATION CAN BE ACHIEVED THAT WOULD PROVIDE SIGNIFICANT APPROACH SAVINGS IN PROCESSING d/ap conducted key interviews in the mailing industry, and developed a COSTS UNDER CERTAIN complex simulation model using Symphony REPAST, an open source DISTRIBUTION CONCEPTS. application. The model follows these steps: A pre-processor sets a number of plants and hubs across the U.S. as part of scenarios. For each scenario, the model routes forecasted mail through facilities to destination while evaluating a number of distribution concepts (mesh, hub-and-spoke). Labor costs are determined as a function of the volume of mail and labor productivity in each facility, and added to transport costs. RESULTS The analysis conducted with the simulation model shows that the number of Postal Service letter and flat processing plants could be substantially consolidated to attain significant lower processing costs with minimal impact on service performance. Compared to today’s 269 plants and 21 hubs, a scenario with 82 plants and 11 hubs shows minimum cost with some service degradation. A scenario with 172 plants and 18 hubs shows almost no service
  • 2. degradation. According to stakeholders, an opportunity exists through network consolidation to better align services offered with network capabilities to ensure that each service’s speed and reliability are achieved. Baseline