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Decision Support for Consumer Direct Grocery Initiatives

Author

Listed:
  • Ann Melissa Campbell

    (Department of Management Sciences, Tippie College of Business, University of Iowa, Iowa City, Iowa 52242-1000)

  • Martin W. P. Savelsbergh

    (School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332-0205)

Abstract

Many companies with consumer direct service models, especially grocery delivery services, have found that home delivery poses an enormous logistical challenge due to the unpredictability of demand coupled with strict delivery windows and low profit margin products. These systems have proven difficult to manage effectively and could benefit from new technology, particularly to manage the interaction between order capture and order delivery. In this article, we define routing and scheduling problems that incorporate important features of this emerging business model and propose algorithms, based on insertion heuristics, for their solution. In the proposed home delivery problem, the company decides which deliveries to accept or reject as well as the time slot for the accepted deliveries so as to maximize expected profits. Computational experiments reveal the importance of an approach that integrates order capture with order delivery and demonstrates the quality and value of the proposed algorithms.

Suggested Citation

  • Ann Melissa Campbell & Martin W. P. Savelsbergh, 2005. "Decision Support for Consumer Direct Grocery Initiatives," Transportation Science, INFORMS, vol. 39(3), pages 313-327, August.
    • Handle: RePEc:inm:ortrsc:v:39:y:2005:i:3:p:313-327
    DOI: 10.1287/trsc.1040.0105
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    References listed on IDEAS

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