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Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Choice-based demand management and vehicle routing in e-fulfillment
AU - Yang, Xinan
AU - Strauss, Arne Karsten
AU - Currie, Christine
AU - Eglese, Richard William
PY - 2016/5/1
Y1 - 2016/5/1
N2 - Attended home delivery services face the challenge of providing narrow delivery time slots to ensure customer satisfaction, while keeping the significant delivery costs under control. To that end, a firm can try to influence customers when they are booking their delivery time slot so as to steer them toward choosing slots that are expected to result in cost-effective schedules. We estimate a multinomial logit customer choice model from historic booking data and demonstrate that this can be calibrated well on a genuine e-grocer data set. We propose dynamic pricing policies based on this choice model to determine which and how much incentive (discount or charge) to offer for each time slot at the time a customer intends to make a booking. A crucial role in these dynamic pricing problems is played by the delivery cost, which is also estimated dynamically. We show in a simulation study based on real data that anticipating the likely future delivery cost of an additional order in a given location canlead to significantly increased profit as compared with current industry practice.
AB - Attended home delivery services face the challenge of providing narrow delivery time slots to ensure customer satisfaction, while keeping the significant delivery costs under control. To that end, a firm can try to influence customers when they are booking their delivery time slot so as to steer them toward choosing slots that are expected to result in cost-effective schedules. We estimate a multinomial logit customer choice model from historic booking data and demonstrate that this can be calibrated well on a genuine e-grocer data set. We propose dynamic pricing policies based on this choice model to determine which and how much incentive (discount or charge) to offer for each time slot at the time a customer intends to make a booking. A crucial role in these dynamic pricing problems is played by the delivery cost, which is also estimated dynamically. We show in a simulation study based on real data that anticipating the likely future delivery cost of an additional order in a given location canlead to significantly increased profit as compared with current industry practice.
KW - home delivery services
KW - vehicle routing
KW - yield management
U2 - 10.1287/trsc.2014.0549
DO - 10.1287/trsc.2014.0549
M3 - Journal article
VL - 50
SP - 473
EP - 488
JO - Transportation Science
JF - Transportation Science
SN - 0041-1655
IS - 2
ER -