Making Opportunity Sales in Attended Home Delivery

Celen Naz Otken, Baris Yildiz, Okan Arslan, Gilbert Laporte

Research output: Contribution to journalArticlepeer-review

2 Citations (SciVal)
2 Downloads (Pure)

Abstract

Research on time window management in attended home delivery mainly focuses on influencing customers’ delivery time choices to reduce monetary and environmental costs. In this study, we adopt a different perspective and propose exploiting otherwise idle time and vehicle capacities to generate extra profits through opportunity sales for e-groceries. We consider nudging potential target customers (residing in locations that are "easy" to insert into the delivery tours) with push notifications to generate new sales. These customers are incentivized for purchases by dropping the terms imposed on standard e-grocery sales such as service fees or minimum purchase quantities. Managing the delivery operations for this innovative business model requires concurrently choosing the target customers and planning the vehicle routes under the offer acceptance and response time uncertainties. To solve this challenging problem, we propose an integer linear programming model that enables a decomposition of the problem into a routing problem and several customer selection problems. For the solution to the customer selection problems, we propose mathematical models with varying risk-taking levels. We also investigate the benefits of dynamic policies to take advantage of the information revealed during the delivery operations in order to adjust customer selection and vehicle routing decisions. Our extensive numerical experiments show that these models, equipped with dynamic decision making, can compete with the risk-ignorant models for the total profit while generating more sales per offer, as well as ensuring timely execution of the delivery operations.
Original languageEnglish
Article number106362
Number of pages19
JournalComputers and Operations Research
Volume160
Early online date1 Aug 2023
DOIs
Publication statusPublished - 31 Dec 2023

Bibliographical note

Funding Information:
The first author thankfully acknowledges the funding provided by TÜBİTAK (The Scientific and Technological Research Council of Turkey) 2210-A National MSc/MA Scholarship Program. The third and fourth authors gratefully acknowledge funding provided by the Natural Sciences and Engineering Research Council of Canada under grants 2022-04979 and 2015-06189 , respectively. Thanks are due to reviewers for their valuable comments.

Publisher Copyright:
© 2023 Elsevier Ltd

Keywords

  • Attended home delivery
  • Dynamic vehicle routing
  • E-grocery
  • Online shopping
  • Opportunity sales

ASJC Scopus subject areas

  • General Computer Science
  • Modelling and Simulation
  • Management Science and Operations Research

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