Recipient-Dependent Deliveries in Last-Mile Logistics

32 Pages Posted: 20 Jan 2022

See all articles by Mehdi Nourinejad

Mehdi Nourinejad

University of Toronto - Rotman School of Management; York University

Opher Baron

University of Toronto - Operations Management

Oded Berman

University of Toronto - Rotman School of Management

Date Written: January 29, 2021

Abstract

Last-mile deliveries contribute to a drastic 28% of the total cost of shipping. Recent technological advancements enable recipients to participate in these deliveries, relieving the cost of this final leg of the supply chain. We present a stylized model to analyze recipient-dependent routing policies in last-mile logistics. The policies are based on scenarios where recipients pick up from a (i) central depot themselves, (ii) hub located by the logistics firm close to them (hybrid), and (iii) hub and deliver to other nearby recipients (crowdsourcing). These policies are partially motivated by the future applications of autonomous vehicles in smart cities and their role in enabling recipient-dependent deliveries as they relinquish the need for drivers. We compare these policies with status quo truck delivery and identify the most cost-effective policy in a dominance space. Our analysis shows a distinct dominance space pattern that is robust against key operational parameters. Using this space we show that (i) status quo truck routing is the currently preferred delivery policy, (ii) the dominance space of the hybrid and crowdsourcing policies is sandwiched by the dominance space of other policies, and (iii) recipient-dependent routing policies dominate the status quo truck policy as the number recipients increases. We validate the insights from the stylized model with a case study of Walmart in Toronto.

Keywords: Vehicle routing; location; freight-materials handling; autonomous vehicles

Suggested Citation

Nourinejad, Mehdi and Baron, Opher and Berman, Oded, Recipient-Dependent Deliveries in Last-Mile Logistics (January 29, 2021). Available at SSRN: https://ssrn.com/abstract=3775721 or http://dx.doi.org/10.2139/ssrn.3775721

Mehdi Nourinejad (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

York University ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Opher Baron

University of Toronto - Operations Management ( email )

105 St. George st
Toronto, ON M5S 3E6
Canada

Oded Berman

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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