Shared Capacity Routing Problem - An Omni-channel Retail Study

25 Pages Posted: 20 Oct 2017 Last revised: 13 Jun 2018

See all articles by Joydeep Paul

Joydeep Paul

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Niels Agatz

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Remy Spliet

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

M. B. M. de Koster

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management

Date Written: May 25, 2018

Abstract

More and more retailers allow customers to order goods online and then pick them up in a store. In this setting, these orders are typically served from a dedicated warehouse. This often means that the stores are visited by different vehicles to replenish the store inventory and to supply the pick-up points. Motivated by a collaboration with an omni-channel grocery retailer in the Netherlands, we study how to best share capacity between the routes associated with these different sales channels. As operational constraints prevent jointly planning the routes, we consider the replenishment routes as fi xed when planning the routes to serve the pick-up orders. An order can be transferred to the replenishment route, if capacity allows. We consider the problem of deciding which customer orders to transfer and which to deliver directly such that the total costs are minimized. We present an exact and heuristic approach to solve this problem. Computational experiments on both real-world and arti ficial instances show that substantial savings can be achieved by sharing vehicle capacity across different channels.

Keywords: Vehicle routing; Capacity sharing; Omni-channel retail; Heuristics

Suggested Citation

Paul, Joydeep and Agatz, Niels A.H. and Spliet, Remy and de Koster, M.B.M. René, Shared Capacity Routing Problem - An Omni-channel Retail Study (May 25, 2018). Available at SSRN: https://ssrn.com/abstract=3055628 or http://dx.doi.org/10.2139/ssrn.3055628

Joydeep Paul (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T09-36
Rotterdam, 3000 DR
Netherlands
+31104082289 (Phone)

HOME PAGE: http://www.rsm.nl/people/joydeep-paul/

Niels A.H. Agatz

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

Remy Spliet

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

M.B.M. René De Koster

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management ( email )

RSM Erasmus University
PO Box 1738
3000 DR Rotterdam
Netherlands
+31 10 408 1719 (Phone)
+31 10 408 9014 (Fax)

HOME PAGE: http://www.rsm.nl/rdekoster

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