Decision Support for Consumer Direct Grocery Initiatives

Ann Melissa Campbell () and Martin W. P. Savelsbergh ()
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Ann Melissa Campbell: Department of Management Sciences, Tippie College of Business, University of Iowa, Iowa City, Iowa 52242-1000
Martin W. P. Savelsbergh: School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332-0205

Transportation Science, 2005, vol. 39, issue 3, 313-327

Abstract: Many companies with consumer direct service models, especially grocery delivery services, have found that home delivery poses an enormous logistical challenge due to the unpredictability of demand coupled with strict delivery windows and low profit margin products. These systems have proven difficult to manage effectively and could benefit from new technology, particularly to manage the interaction between order capture and order delivery. In this article, we define routing and scheduling problems that incorporate important features of this emerging business model and propose algorithms, based on insertion heuristics, for their solution. In the proposed home delivery problem, the company decides which deliveries to accept or reject as well as the time slot for the accepted deliveries so as to maximize expected profits. Computational experiments reveal the importance of an approach that integrates order capture with order delivery and demonstrates the quality and value of the proposed algorithms.

Keywords: e-commerce; home delivery; real-time decision making; vehicle routing; insertion heuristics; delivery windows (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (54)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ortrsc:v:39:y:2005:i:3:p:313-327

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