Track: Logistics

Abstract

Technological developments in the world today greatly affect the development of technology-based business models, one of them is E-Commerce or Electronic Commerce. The digital-based trading business is projected to increase by 51.6 percent from 2020. The development of transactions on this online trading platform also affects businesses in the fulfillment or service sector, which includes a series of processes for fulfilling product orders from customers. This process is closely related to the parcel/expedition shipping industry. In an expedition, the process of sending goods from the starting point to the end point is divided into three parts, namely First Mile, Middle Mile, and Last Mile. Last mile delivery is a process carried out by logistics parties to send and deliver packages to recipients. Optimal hub locations can lead to reduced transportation costs as they directly affect the flow of goods. The purpose of determining a suitable location for the hub is to establish an efficient flow of goods delivery connections so that goods can be distributed as quickly as possible to the final recipient of the goods. Therefore, the determination of the Last mile hub becomes very important because it deals directly with the recipient of the goods so that it affects satisfaction with the services of a freight forwarder. In this study, the author uses a case study in an expedition company in Indonesia for the Depok area coverage and uses the Facility Location Problem method to find out the most appropriate location and number of hubs to cover the entire area by considering the coverage area and cost of the selected hub building. The optimization results are able to provide a warehouse choice solution with cheaper warehouse rental costs and cheaper transportation costs in specifications for a larger number of warehouses. As an example of a 10 Km coverage scenario, providing 4 warehouses with the furthest delivery point of 9.3 Km has a total cost of IDR 6,500,363,150 or 12% lower cost than the existing condition. With a lower furthest point, the distance and time required for parcel delivery is also faster and has the potential to increase customer satisfaction.