Federal Express began overnight package delivery in 1973 and quickly found that deciding the network by intuition failed.
It then built an origin-destination model, followed by models that simulated operations, finances, engine use, personnel assignments and route structures, which guided the business through periods of fast growth.
Founder Frederick W. Smith embedded OR and management-science staff into the company, and the practice became a reason for its growth.
Model the whole air network before you build it
The network was new and impossible to run by intuition
An origin-destination model showed where freight should fly
Simulation let the company test operations before committing
Founder Fred Smith made OR a permanent part of the firm
A network business should model the whole system before building it, because an accurate model turns growth into a plan.
Federal Express became one of the best-known cases of a company built by operations research, with the models repeatedly used as the network, fleet and market grew.
FOLLOW THE EVIDENCE
The sources
- Absolutely, Positively Operations Research: The Federal Express Story EconPapers / INFORMS Interfaces · econpapers.repec.org
- Absolutely, positively operations research: The Federal Express story IFORS · iaorifors.com