Crowdkeeping in Last-Mile Delivery

Xin Wang (), Okan Arslan () and Erick Delage ()
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Xin Wang: GERAD and Department of Decision Sciences, HEC Montréal, Montréal, Québec H3T 2A7, Canada
Okan Arslan: GERAD and Department of Decision Sciences, HEC Montréal, Montréal, Québec H3T 2A7, Canada
Erick Delage: GERAD and Department of Decision Sciences, HEC Montréal, Montréal, Québec H3T 2A7, Canada

Transportation Science, 2024, vol. 58, issue 2, 474-498

Abstract: In order to improve the efficiency of the last-mile delivery system when customers are possibly absent for deliveries, we propose the idea of employing the crowd to work as keepers and to provide storage services for their neighbors. Crowd keepers have extra flexibility, more availability, and lower costs than fixed storage options such as automated lockers, and this leads to a more efficient and a more profitable system for last-mile deliveries. We present a bilevel program that jointly determines the assignment, routing, and pricing decisions while considering customer preferences, keeper behaviors, and platform operations. We develop an equivalent single-level program, a mixed-integer linear program with subtour elimination constraints, that can be solved to optimality using a row generation algorithm. To improve the efficiency of the solution procedure, we further derive exact best response sets for both customers and keepers, and approximate optimal travel times using linear regression. We present a numerical study using a real-world data set from Amazon. The fixed-storage and no-storage systems are used as benchmarks to assess the performance of the crowdkeeping system. The results show that the crowdkeeping delivery system has the potential to generate higher profits because of its ability to consolidate deliveries and to eliminate failed deliveries.

Keywords: last-mile delivery; crowdkeeping; bilevel program; pricing and routing; row generation (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ortrsc:v:58:y:2024:i:2:p:474-498

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