Service Oriented Considerate Routing: Data, Predictions and Robust Decisions
45 Pages Posted: 15 Apr 2024
Date Written: April 2, 2024
Abstract
In this research, we focus on improving service oriented routing by addressing the nuanced challenge of punctuality through the consideration of couriers' ability to ensure on-time deliveries. We utilize a comprehensive real-world dataset from a cold chain logistics firm for analysis. Our empirical investigation indicates that relying solely on travel distance is inadequate for accurate delivery time prediction. We highlight critical elements, including couriers' fixed effects and workload, as key covariates to improve prediction performance. Distinguishing our work from existing literature, we integrate couriers' workload and location familiarity into our Service Oriented Routing (SOR) model to enhance predictions of delivery times. We introduce the Courier Assigned Location Mismatch (CALM) metric as a less intrusive approach to incorporating couriers' location familiarity into their delivery efficiency. We propose the novel Service Oriented Considerate Routing (SOCR) model; by minimizing the CALM metric, couriers are assigned routes within familiar territories to the extent possible within the total routing distance constraint. The considerate routing strategies could potentially reduce the stress couriers face when delivering in unfamiliar areas. Additionally, we develop the connection of the SOCR model with a robust satisficing approach. This strategy guarantees timely deliveries by effectively mitigating the effects of predictive inaccuracies and potential model misspecifications. To solve the SOCR model, we apply Benders decomposition for an exact solution and Tabu Search for a heuristic approach, demonstrating their effectiveness and superior out-of-sample performance. Notably, our heuristic solutions significantly outperform exact solutions of classical vehicle routing problems with deadlines, resulting in substantial improvements in timely delivery performance.
Keywords: Service Oriented Routing, Courier Assigned Location Mismatch Metric, Courier Behavior, Robust Satisficing, Data-driven Optimization
JEL Classification: C6, D8
Suggested Citation: Suggested Citation