IDEAS home Printed from https://ideas.repec.org/a/inm/ormsom/v24y2022i2p791-809.html

Crowdsourcing Last-Mile Deliveries

Author

Listed:
  • Soraya Fatehi

    (Naveen Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080)

  • Michael R. Wagner

    (Michael G. Foster School of Business, University of Washington, Seattle, Washington 98195)

Abstract

Problem definition : Because of the emergence and development of e-commerce, customers demand faster and cheaper delivery services. However, many retailers find it challenging to efficiently provide fast and on-time delivery services to their customers. Academic/practical relevance : Amazon and Walmart are among the retailers that are relying on independent crowd drivers to cope with on-demand delivery expectations. Methodology : We propose a novel robust crowdsourcing optimization model to study labor planning and pricing for crowdsourced last-mile delivery systems that are utilized for satisfying on-demand orders with guaranteed delivery time windows. We develop our model by combining crowdsourcing, robust queueing, and robust routing theories. We show the value of the robust optimization approach by analytically studying how to provide fast and guaranteed delivery services utilizing independent crowd drivers under uncertainties in customer demands, crowd availability, service times, and traffic patterns; we also allow for trend and seasonality in these uncertainties. Results : For a given delivery time window and an on-time delivery guarantee level, our model allows us to analytically derive the optimal delivery assignments to available independent crowd drivers and their optimal hourly wage. Our results show that crowdsourcing can help firms decrease their delivery costs significantly while keeping the promise of on-time delivery to their customers. Managerial implications : We provide extensive managerial insights and guidelines for how such a system should be implemented in practice.

Suggested Citation

  • Soraya Fatehi & Michael R. Wagner, 2022. "Crowdsourcing Last-Mile Deliveries," Manufacturing & Service Operations Management, INFORMS, vol. 24(2), pages 791-809, March.
    • Handle: RePEc:inm:ormsom:v:24:y:2022:i:2:p:791-809
    DOI: 10.1287/msom.2021.0973
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/msom.2021.0973
    Download Restriction: no
    File URL: https://libkey.io/10.1287/msom.2021.0973?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. G. Clarke & J. W. Wright, 1964. "Scheduling of Vehicles from a Central Depot to a Number of Delivery Points," Operations Research, INFORMS, vol. 12(4), pages 568-581, August.
    2. Chaithanya Bandi & Dimitris Bertsimas & Nataly Youssef, 2015. "Robust Queueing Theory," Operations Research, INFORMS, vol. 63(3), pages 676-700, June.
    3. Dimitris J. Bertsimas & Garrett van Ryzin, 1993. "Stochastic and Dynamic Vehicle Routing in the Euclidean Plane with Multiple Capacitated Vehicles," Operations Research, INFORMS, vol. 41(1), pages 60-76, February.
    4. Chrysanthos E. Gounaris & Wolfram Wiesemann & Christodoulos A. Floudas, 2013. "The Robust Capacitated Vehicle Routing Problem Under Demand Uncertainty," Operations Research, INFORMS, vol. 61(3), pages 677-693, June.
    5. Long He & Ho-Yin Mak & Ying Rong & Zuo-Jun Max Shen, 2017. "Service Region Design for Urban Electric Vehicle Sharing Systems," Manufacturing & Service Operations Management, INFORMS, vol. 19(2), pages 309-327, May.
    6. Terry A. Taylor, 2018. "On-Demand Service Platforms," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 704-720, October.
    7. Dayarian, Iman & Crainic, Teodor Gabriel & Gendreau, Michel & Rei, Walter, 2016. "An adaptive large-neighborhood search heuristic for a multi-period vehicle routing problem," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 95(C), pages 95-123.
    8. Saif Benjaafar & Guangwen Kong & Xiang Li & Costas Courcoubetis, 2019. "Peer-to-Peer Product Sharing: Implications for Ownership, Usage, and Social Welfare in the Sharing Economy," Management Science, INFORMS, vol. 65(2), pages 477-493, February.
    9. John Gunnar Carlsson & Erick Delage, 2013. "Robust Partitioning for Stochastic Multivehicle Routing," Operations Research, INFORMS, vol. 61(3), pages 727-744, June.
    10. Gérard P. Cachon, 2014. "Retail Store Density and the Cost of Greenhouse Gas Emissions," Management Science, INFORMS, vol. 60(8), pages 1907-1925, August.
    11. G. A. Croes, 1958. "A Method for Solving Traveling-Salesman Problems," Operations Research, INFORMS, vol. 6(6), pages 791-812, December.
    12. Chaithanya Bandi & Nikolaos Trichakis & Phebe Vayanos, 2019. "Robust Multiclass Queuing Theory for Wait Time Estimation in Resource Allocation Systems," Management Science, INFORMS, vol. 65(1), pages 152-187, January.
    13. Chaithanya Bandi & Dimitris Bertsimas & Nataly Youssef, 2018. "Robust transient analysis of multi-server queueing systems and feed-forward networks," Queueing Systems: Theory and Applications, Springer, vol. 89(3), pages 351-413, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Aliaa Alnaggar & Fatma Gzara & James Bookbinder, 2025. "Heatmap Design for Probabilistic Driver Repositioning in Crowdsourced Delivery," Transportation Science, INFORMS, vol. 59(1), pages 81-103, January.
    2. Mandal, Minakshi Punam & Santini, Alberto & Archetti, Claudia, 2025. "Tactical workforce sizing and scheduling decisions for last-mile delivery," European Journal of Operational Research, Elsevier, vol. 323(1), pages 153-169.
    3. Niels Agatz & Soo-Haeng Cho & Hao Sun & Hai Wang, 2024. "Transportation-Enabled Services: Concept, Framework, and Research Opportunities," Service Science, INFORMS, vol. 16(1), pages 1-21, March.
    4. Alnaggar, Aliaa & Bhatt, Sahil, 2026. "Fleet size planning in crowdsourced delivery: Balancing service level and driver utilization," Omega, Elsevier, vol. 139(C).
    5. Chaithanya Bandi & Eojin Han & Alexej Proskynitopoulos, 2024. "Robust Queue Inference from Waiting Times," Operations Research, INFORMS, vol. 72(2), pages 459-480, March.
    6. Ziliang Jin & Yulan Wang & Yun Fong Lim & Kai Pan & Zuo-Jun Max Shen, 2023. "Vehicle Rebalancing in a Shared Micromobility System with Rider Crowdsourcing," Manufacturing & Service Operations Management, INFORMS, vol. 25(4), pages 1394-1415, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ming Hu, 2021. "From the Classics to New Tunes: A Neoclassical View on Sharing Economy and Innovative Marketplaces," Production and Operations Management, Production and Operations Management Society, vol. 30(6), pages 1668-1685, June.
    2. Du, Timon C. & Li, Eldon Y. & Chou, Defrose, 2005. "Dynamic vehicle routing for online B2C delivery," Omega, Elsevier, vol. 33(1), pages 33-45, February.
    3. Yiwei Chen & Ming Hu, 2020. "Pricing and Matching with Forward-Looking Buyers and Sellers," Manufacturing & Service Operations Management, INFORMS, vol. 22(4), pages 717-734, July.
    4. Wei Qi & Lefei Li & Sheng Liu & Zuo-Jun Max Shen, 2018. "Shared Mobility for Last-Mile Delivery: Design, Operational Prescriptions, and Environmental Impact," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 737-751, October.
    5. Lin Tian & Baojun Jiang & Yifan Xu, 2021. "Manufacturer’s Entry in the Product-Sharing Market," Manufacturing & Service Operations Management, INFORMS, vol. 23(3), pages 553-568, May.
    6. Carlsson, John Gunnar & Behroozi, Mehdi, 2017. "Worst-case demand distributions in vehicle routing," European Journal of Operational Research, Elsevier, vol. 256(2), pages 462-472.
    7. Zhang, Yu & Huang, Min & Tian, Lin & Jin, Delong & Cai, Gangshu(George), 2021. "Build or join a sharing platform? The choice of manufacturer's sharing mode," International Journal of Production Economics, Elsevier, vol. 231(C).
    8. Zhang, Yu & Huang, Min & Tian, Lin & Cai, Gangshu George & Jin, Delong & Fan, Zhiping, 2023. "Manufacturer’s product line selling strategy and add-on policy in product sharing," European Journal of Operational Research, Elsevier, vol. 308(3), pages 1332-1343.
    9. Mingliu Chen & Ming Hu, 2024. "Courier Dispatch in On-Demand Delivery," Management Science, INFORMS, vol. 70(6), pages 3789-3807, June.
    10. Junyu Cao & Wei Qi, 2023. "Stall Economy: The Value of Mobility in Retail on Wheels," Operations Research, INFORMS, vol. 71(2), pages 708-726, March.
    11. Hossein Abouee‐Mehrizi & Opher Baron & Oded Berman & David Chen, 2021. "Adoption of Electric Vehicles in Car Sharing Market," Production and Operations Management, Production and Operations Management Society, vol. 30(1), pages 190-209, January.
    12. Ahmed Kheiri & Alina G. Dragomir & David Mueller & Joaquim Gromicho & Caroline Jagtenberg & Jelke J. Hoorn, 2019. "Tackling a VRP challenge to redistribute scarce equipment within time windows using metaheuristic algorithms," EURO Journal on Transportation and Logistics, Springer;EURO - The Association of European Operational Research Societies, vol. 8(5), pages 561-595, December.
    13. Xingyuan Li & Jing Bai, 2021. "A Ridesharing Choice Behavioral Equilibrium Model with Users of Heterogeneous Values of Time," IJERPH, MDPI, vol. 18(3), pages 1-22, January.
    14. Jie Yang & Zeyu Wang & Chunming Xu & Di Wang, 2024. "The Competition Between Taxi Services and On-Demand Ride-Sharing Services: A Service Quality Perspective," Sustainability, MDPI, vol. 16(22), pages 1-25, November.
    15. Hu, Xinru & Zhou, Shuiyin & Luo, Xiaomeng & Li, Jianbin & Zhang, Chi, 2024. "Optimal pricing strategy of an on-demand platform with cross-regional passengers," Omega, Elsevier, vol. 122(C).
    16. Vibhanshu Abhishek & Jose A. Guajardo & Zhe Zhang, 2021. "Business Models in the Sharing Economy: Manufacturing Durable Goods in the Presence of Peer-to-Peer Rental Markets," Information Systems Research, INFORMS, vol. 32(4), pages 1450-1469, December.
    17. Kostas Bimpikis & Ozan Candogan & Daniela Saban, 2019. "Spatial Pricing in Ride-Sharing Networks," Operations Research, INFORMS, vol. 67(3), pages 744-769, May.
    18. Hernan Caceres & Rajan Batta & Qing He, 2017. "School Bus Routing with Stochastic Demand and Duration Constraints," Transportation Science, INFORMS, vol. 51(4), pages 1349-1364, November.
    19. Yixuan Liu & Xiaofang Wang & Stephen Gilbert & Guoming Lai, 2023. "On the Participation, Competition and Welfare at Customer-Intensive Discretionary Service Platforms," Manufacturing & Service Operations Management, INFORMS, vol. 25(1), pages 218-234, January.
    20. Shubhechyya Ghosal & Wolfram Wiesemann, 2020. "The Distributionally Robust Chance-Constrained Vehicle Routing Problem," Operations Research, INFORMS, vol. 68(3), pages 716-732, May.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormsom:v:24:y:2022:i:2:p:791-809. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.