Joint location and pricing optimization of self-service in urban logistics considering customers’ choice behavior

Wenwei Zhang, Min Xu and Shuaian Wang

Transportation Research Part E: Logistics and Transportation Review, 2023, vol. 174, issue C

Abstract: Self-services by widely-deployed stations allow customers to pick up their packages themselves and have great potential to reduce last-mile delivery cost by aggregating spatial demands. An efficient self-service design for the locations of self-service stations and the service price will help to shift customers from the home-delivery service to the cost-effective self-service, thus reducing the vehicle routing cost of the dedicated fleet. This study proposes a comprehensive modeling and optimization framework for the joint self-service station location and service price (SLSP) optimization problem considering customers’ choice behavior and vehicle routing in order to maximize the profit of the logistics service providers in the last-mile delivery system. Logit equilibrium and Wardrop equilibrium conditions are employed to characterize the delivery service choice and route choice behavior of customers. A convex optimization model is developed to capture the distribution of customers opting for home-delivery service and self-services at various locations, who aim to maximize their expected utilities. We then formulate the SLSP problem as a mathematical program with complementarity constraints. An active set algorithm is proposed to solve the model effectively. Numerical experiments based on the Nguyen-Dupuis and Sioux Falls networks are conducted to demonstrate the proposed framework and derive managerial insights.

Keywords: Facility location; Service pricing; Customer choice behavior; Self-service (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1366554523001163
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:transe:v:174:y:2023:i:c:s1366554523001163

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/bibliographic
http://www.elsevier. ... 600244/bibliographic

DOI: 10.1016/j.tre.2023.103128

Access Statistics for this article

Transportation Research Part E: Logistics and Transportation Review is currently edited by W. Talley

More articles in Transportation Research Part E: Logistics and Transportation Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().