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Medium Operations Optimization

UPS in Italy

#Mining #Logistics #Operations
ProHub Comment

This case tests operational optimization and bottleneck analysis. The candidate must recognize that the time constraint (8 minutes per delivery × 1,000 packages = 133 truck-hours available in 10 hours) is the primary bottleneck, requiring at least 13.3 trucks. The candidate then must evaluate three truck models based on capacity and cost-efficiency, recognizing that while Truck B has the lowest daily cost, Truck C's superior capacity makes it most cost-effective overall.

Estimated Time 15 minutes
Difficulty Medium
Source UCLA
50 / 100
Your client is a startup in a small village in Italy that provides the local delivery of packages sent to this village through UPS’s next-day-delivery service. The CEO of this firm has hired you to help them decide how many trucks to lease. There are different models available, but our client has been told that they will need to have a consistent fleet (they can only lease one model type) and so we will also need to identify what model they should lease. Let me provide a quick overview of how the company operates: (i) They receive every package at 5pm from UPS, (ii) a bunch of people then sort the packages and (iii) load them on a truck where they are stored overnight, and (iv) then deliver them starting at 9am for 10 hours. How would you suggest approaching the client’s problem?

Clarifying Information

  1. Packages delivered per day: 1,000
  2. Dimension of package (envelope) is 1x1x1.
  3. Operates five days a week.
  4. It takes 8 minutes, on average, to deliver a single package and to be ready for the next one (“assume they deliver one every 8 minutes”).
  5. Drivers, fuel, etc. are not considered and do not make a material difference to the analysis (for sake of simplicity).
  6. Truck A: Cost per day $150, Dimensions 345
  7. Truck B: Cost per day $40, Dimensions 921
  8. Truck C: Cost per day $130, Dimensions 6810