Customer acceptance mechanisms for home deliveries in metropolitan areas

Customer acceptance mechanisms for home deliveries in metropolitan areas

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Article ID: iaor20141183
Volume: 233
Issue: 1
Start Page Number: 193
End Page Number: 207
Publication Date: Feb 2014
Journal: European Journal of Operational Research
Authors: ,
Keywords: simulation: applications, retailing
Abstract:

Efficient and reliable home delivery is crucial for the economic success of online retailers. This is especially challenging for attended home deliveries in metropolitan areas where logistics service providers face congested traffic networks and customers expect deliveries in tight delivery time windows. Our goal is to develop and compare strategies that maximize the profits of a logistics service provider by accepting as many delivery requests as possible, while assessing the potential impact of a request on the service quality of a delivery tour. Several acceptance mechanisms are introduced, differing in the amount of travel time information that is considered in the decision of whether a delivery request can be accommodated or not. A real‐world inspired simulation framework is used for comparison of acceptance mechanisms with regard to profits and service quality. Computational experiments utilizing this simulation framework investigate the effectiveness of acceptance mechanisms and help identify when more advanced travel time information may be worth the additional data collection and computational efforts.

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