From operational to strategic modelling: A continuous multi-scale approach for last-mile analysis

Abstract

Supply chain planning requires decision-making at all levels, especially in the new normal of intervened supply networks. The integration of strategic network design and operational routing decisions has been widely studied in the literature as the location-routing problem (LRP). However, the LRP does not consider the differences in the planning horizon of each sub-problem, nor have geospatial elements been included in the distribution of demand. This paper aims to redesign the conceptual modelling of the last mile to inform strategic network design problems. A continuous multi-scale approach (CMA) is proposed by taking elements from the districting problem (DP) and continuous approximation (CA). This approach includes stochastic demand in the analysis and the effects of time windows and failed deliveries. The validation of CMA in a case of rural parcel deliveries in Belgium shows an estimate of the distance travelled similar to traditional routing algorithms in scenarios with high demand density. Likewise, the effects of time windows on the spatial configuration of multi-scale districting are explored. This approach provides insights for decision-making in strategic and tactical planning, such as sonification, differentiated services to satisfy consumer preferences, and fleet management. The limitations of the CMA lie in its implementation in purely operational scenarios since it does not offer detailed routing information. Subsequent research aims to exploit the potential of strategic last-mile modelling with effective integration into network design problems.