Optimization of demand-related packaging sizes using a p-median approach

The determining of efficient packaging sizes is a key factor in saving material and transportation costs and also in reducing packaging waste. By analyzing the range of items and their contribution to sales-relevant order structures of a globally operating mail order company, a simplified packing algorithm is proposed. In combination with well-known methodologies, this heuristic provides near optimal solutions improving current packaging of eCommerce companies. It is shown that simple, practical heuristics are sufficient to achieve average material savings of more than 10 %. In order to find efficient packaging sizes, a set of them is generated by discretization of packaging dimensions. Given the set of orders and the set of packaging sizes, a p -median approach is applied to find a specified number of optimal, demand-related packaging sizes.