A Multicircle Order Acceptance Strategy for Dynamic Vehicle Routing Problems Considering Customer Choice of Last-Mile Delivery Modes and Time Slots

A Multicircle Order Acceptance Strategy for Dynamic Vehicle Routing Problems Considering Customer Choice of Last-Mile Delivery Modes and Time Slots

Hanguang Qiu, Cejun Cao, Jie Zhen, Hongyong Fu, Jixiang Zhou
DOI: 10.4018/IJISSCM.2021100101
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Abstract

A multicircle order acceptance strategy was proposed to decide whether to accept customer requests for specific last-mile delivery modes (including attended home or reception box delivery) and time slots. The strategy was composed of initializing acceptable time slot allocations, reallocating acceptable time slots, matching reference sites, and assessing time slot deviations. A strategy-oriented insertion algorithm for dynamic vehicle routing problems with hard time windows was constructed, thereby showing the proposed strategy achieves a better balance between revenue and distance than the “first come and first served” strategy. Always accepting global optimization result is not significantly better than adopting the result conditionally or based on simulated annealing theory. The distance and revenue gradually increase with the number of reference sites, while revenue/distance ratio decreases. The vehicles are available to serve more attended home delivery orders with a gradual increase in time slot interval, thereby leading to an increase of AHD and total revenue.
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Introduction

With the trend of “online to offline” (O2O) in retail, Chinese delivery companies have begun to provide customers with alternative delivery options, such as different last-mile delivery modes and time slots. The delivery modes include attended home delivery (AHD), reception box (RB), and Collection and Delivery Points (CDPs) (Bjørnar & Stein, 2010; Wang et al., 2014).

Given that customers choose different delivery modes and time slots, the routing operation has to deal with the dynamics from customer requests and needs to be optimized with the order acceptance (Ehmke & Campbell, 2014; Xin, 2012). On the one hand, after the customer arrives and chooses the delivery mode and time slot, the delivery company could know the request location and selected delivery options. On the other hand, the delivery company needs to quickly decide whether or not to accept the request based on the RBs layout, the vehicle routing feasibility, and the constraints of the accepted orders (Bruck et al., 2018). The decisions about order acceptance and vehicle routing are dynamically interactive. The acceptance of a new order requires optimizing the vehicle routes, which will constrain the order acceptance in the next stage (Bruck et al., 2018; Florent Hernandez et al., 2017). Particularly, RB delivery could ignore the constraint of the earliest time and only needs to be served before the latest time. To deal with the dynamics inherited from sequential customer arriving and the interaction between order acceptance and vehicle routing, a multicircle order acceptance strategy with strategy-oriented algorithm would be proposed.

Although this topic is widely studied, the following questions are still open. When the customer arrives sequentially and dynamically, how can the order accept decision be made quickly based on the vehicle routing, RB location, and the service constraints of accepted order? If a delivery order is accepted, how can the order acceptance strategy be necessarily adjusted? How could the behavior of customers choosing different delivery modes and time slots be described?

Firstly, one related stream is time slots allocation strategy in Time Slots Management (TSM). It can be divided into static and dynamic strategy. For the static strategy, the time slots allocation stays unchanged (Agatz et al., 2011; F. Hernandez et al., 2017; Mackert, 2019). In contrast, concerning the dynamic one, the time slots allocation will be adjusted (Campbell & Savelsbergh, 2005; Ehmke & Campbell, 2014; Ulmer & Thomas, 2020). Most of the existing literature about TSM focuses on AHD, which is consistent with the situation that most residents of the US and EU live in independent houses. yet the TSM with different delivery modes is found in little literature.

Secondly, Multinomial Logit models were mainly used to describe customer's choice of time slots, such as Asdemir, K. (Asdemir et al., 2009). Recently, the generalized attraction model (GAM) was applied (Vinsensius et al., 2020). It is relevant in the customer choice behavior between delivery modes and time slots. If the customers choose AHD, customers may prefer that the delivery would be finished on time. The research considering the customers’ choice correlation is still relatively rare.

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