Shared Capacity Routing Problem – An Omni-channel Retail Study

Joydeep Paul, Niels Agatz, Remy Spliet and René de Koster

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: More and more retailers allow customers to order goods online and then pick them up in a store. In this setting, these orders are typically served from a dedicated warehouse. This often means that the stores are visited by different vehicles to replenish the store inventory and to supply the pick-up points. Motivated by a collaboration with an omni- channel grocery retailer in the Netherlands, we study how to best share capacity between the routes associated with these different sales channels. As operational constraints prevent jointly planning the routes, we consider the replenishment routes as fixed when planning the routes to serve the pick-up orders. An order can be transferred to the replenishment route, if capacity allows. We consider the problem of deciding which customer orders to transfer and which to deliver directly such that the total costs are minimized. We present an exact and heuristic approach to solve this problem. Computational experiments on both real-world and artificial instances show that substantial savings can be achieved by sharing vehicle capacity across different channels.

Keywords: Vehicle routing; capacity sharing; omni-channel retail; heuristics (search for similar items in EconPapers)
Pages: 25
Date: 2017-10-19
New Economics Papers: this item is included in nep-cmp, nep-mkt, nep-pay and nep-tre
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