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Workforce planning at USPS mail processing and distribution centers using stochastic optimization

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  • Jonathan Bard
  • David Morton
  • Yong Wang

Abstract

Service organizations that operate outside the normal 8-hour day and face wide fluctuations in demand constantly struggle to optimize the size and composition of their workforce. Recent research has shown that improved personnel scheduling methods that take demand uncertainty into account can lead to significant reductions in labor costs. This paper addresses a staff planning and scheduling problem that arises at United States Postal Service (USPS) mail processing & distribution centers (P&DCs) and develops a two-stage stochastic integer program with recourse for the analysis. In the first stage, before the demand is known, the number of full-time and part-time employees is determined for the permanent workforce. In the second stage, the demand is revealed and workers are assigned to specific shifts during the week. When necessary, overtime and casual labor are used to satisfy demand. This paper consists of two parts: (1) the analysis of the demand distribution in light of historical data, and (2) the development and analysis of the stochastic integer programming model. Using weekly demand for a three-year period, we first investigate the possibility that there exists an end-of-month effect, i.e., the week at the end of month has larger volume than the other weeks. We show that the data fail to indicate that this is the case. In the computational phase of the work, three scenarios are considered: high, medium, and low demand. The stochastic optimization problem that results is a large-scale integer program that embodies the full set of contractual agreements and labor rules governing the design of the workforce at a P&DC. The usefulness of the model is evaluated by solving a series of instances constructed from data provided by the Dallas facility. The results indicate that significant savings are likely when the recourse problem is used to help structure the workforce. Copyright Springer Science+Business Media, LLC 2007

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  • Jonathan Bard & David Morton & Yong Wang, 2007. "Workforce planning at USPS mail processing and distribution centers using stochastic optimization," Annals of Operations Research, Springer, vol. 155(1), pages 51-78, November.
    • Handle: RePEc:spr:annopr:v:155:y:2007:i:1:p:51-78:10.1007/s10479-007-0213-1
    DOI: 10.1007/s10479-007-0213-1
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    References listed on IDEAS

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    3. Zhenzhen Yan & Sarah Yini Gao & Chung Piaw Teo, 2018. "On the Design of Sparse but Efficient Structures in Operations," Management Science, INFORMS, vol. 64(7), pages 3421-3445, July.
    4. Yiting Xing & Ling Li & Zhuming Bi & Marzena Wilamowska‐Korsak & Li Zhang, 2013. "Operations Research (OR) in Service Industries: A Comprehensive Review," Systems Research and Behavioral Science, Wiley Blackwell, vol. 30(3), pages 300-353, May.
    5. Restrepo, María I. & Gendron, Bernard & Rousseau, Louis-Martin, 2017. "A two-stage stochastic programming approach for multi-activity tour scheduling," European Journal of Operational Research, Elsevier, vol. 262(2), pages 620-635.
    6. Sobhani, A. & Wahab, M.I.M. & Neumann, W.P., 2017. "Incorporating human factors-related performance variation in optimizing a serial system," European Journal of Operational Research, Elsevier, vol. 257(1), pages 69-83.
    7. Van den Bergh, Jorne & Beliën, Jeroen & De Bruecker, Philippe & Demeulemeester, Erik & De Boeck, Liesje, 2013. "Personnel scheduling: A literature review," European Journal of Operational Research, Elsevier, vol. 226(3), pages 367-385.
    8. Kibaek Kim & Sanjay Mehrotra, 2015. "A Two-Stage Stochastic Integer Programming Approach to Integrated Staffing and Scheduling with Application to Nurse Management," Operations Research, INFORMS, vol. 63(6), pages 1431-1451, December.
    9. X Zhang & A Chakravarthy & Q Gu, 2009. "Equipment scheduling problem under disruptions in mail processing and distribution centres," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 60(5), pages 598-610, May.
    10. Ferdinand Kiermaier & Markus Frey & Jonathan F. Bard, 2020. "The flexible break assignment problem for large tour scheduling problems with an application to airport ground handlers," Journal of Scheduling, Springer, vol. 23(2), pages 177-209, April.
    11. Bürgy, Reinhard & Michon-Lacaze, Hélène & Desaulniers, Guy, 2019. "Employee scheduling with short demand perturbations and extensible shifts," Omega, Elsevier, vol. 89(C), pages 177-192.
    12. Douglas S. Altner & Erica K. Mason & Les D. Servi, 2019. "Two-stage stochastic days-off scheduling of multi-skilled analysts with training options," Journal of Combinatorial Optimization, Springer, vol. 38(1), pages 111-129, July.
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    14. Jaime Miranda & Pablo A. Rey & Antoine Sauré & Richard Weber, 2018. "Metro Uses a Simulation-Optimization Approach to Improve Fare-Collection Shift Scheduling," Interfaces, INFORMS, vol. 48(6), pages 529-542, November.
    15. Tohidi, Mohammad & Kazemi Zanjani, Masoumeh & Contreras, Ivan, 2021. "A physician planning framework for polyclinics under uncertainty," Omega, Elsevier, vol. 101(C).
    16. Douglas S. Altner & Anthony C. Rojas & Leslie D. Servi, 2018. "A two-stage stochastic program for multi-shift, multi-analyst, workforce optimization with multiple on-call options," Journal of Scheduling, Springer, vol. 21(5), pages 517-531, October.
    17. Dellaert, Nico & Jeunet, Jully & Mincsovics, Gergely, 2011. "Budget allocation for permanent and contingent capacity under stochastic demand," International Journal of Production Economics, Elsevier, vol. 131(1), pages 128-138, May.

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