Two critical yet frequently conflicting objectives for logistics and transportation service companies are improving customer satisfaction and reducing transportation cost. In particular, given a net- work of customer requests with preferred service times, it is very challenging to find vehicle routes and service schedules simultaneously that respect all operating constraints and minimize the total transportation and customers’ inconvenience costs. In this paper, we introduce the Vehicle Routing Problem with Time Windows and Convex Node Costs (VRPTW-CNC), in which we model each customer’s inconvenience cost as a convex function of the service start time at that customer. The VRPTW-CNC combines and extends both the standard vehicle routing problem with time windows and some previous results on the optimal service scheduling problem over a fixed route. We propose a branch-cut-and-price algorithm to solve the VRPTW-CNC with general convex inconvenience cost functions. To solve the pricing problem, our labeling algorithm only generates labels that possibly lead to optimal schedule times over a route, which significantly improves the effectiveness of pricing. Extensive computational results demonstrate the effectiveness of our approach.
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