Operations: Last-Mile Delivery Optimization with Drones

Question

A major e-commerce retailer in the US is seeing last-mile delivery costs soar to 30% of total fulfillment costs. They are testing a 'Mother-Ship' model: a delivery van carries 50 parcels and 4 drones; the drones deliver small packages while the van focuses on heavy items or high-density areas. Sub-questions: 1) Calculate the potential reduction in 'Cost per Delivery.' 2) What are the operational bottlenecks? 3) In which geographic segments will this be most effective?

Accepted Answer

Current State: One driver delivers 100 packages/day. Cost = (Driver Wage + Fuel + Van Depreciation) / 100. Assume ~$5.00/package.

Drone State: The driver now acts as a 'mobile hub.' Drones handle 60% of packages (small/light). This reduces the 'time-per-stop' for the van and allows it to cover a larger territory. If the driver + 4 drones can deliver 200 packages/day, the fixed labor cost is spread over double the volume. Even with higher CapEx for drones, the cost could drop to ~$3.50/package (a 30% saving).

Bottlenecks:
1. Battery Life/Payload: Drones can't carry a 20lb box of detergent or fly 20 miles in wind.
2. Regulations: FAA Part 107 rules and 'Line of Sight' requirements.
3. Drop-off Logistics: Issues with apartment buildings or houses with heavy tree cover.

Segmentation: This model is most effective in 'Suburban' areas (high driveway access, medium density). It fails in 'Urban' areas (skyscrapers, GPS interference) and 'Rural' areas (distances too great for drone battery life).

Final Recommendation: Pilot in a mid-sized suburban city (e.g., Phoenix) to refine the software orchestration between the van and drones before scaling.

Operations: Last-Mile Delivery Optimization with Drones

Question Explain

Answer Example

Related Interview Questions