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Tactical Design of Same-Day Delivery Systems

Alexander Stroh(alexmstroh***at***gatech.edu)
Alan Erera(alan.erera***at***isye.gatech.edu)
Alejandro Toriello(atoriello***at***isye.gatech.edu)

Abstract: We study tactical models for the design of same-day delivery (SDD) systems. Same-day fulfillment in e-commerce has seen substantial growth in recent years, and the underlying management of such a service is complex. While the literature includes operational models to study SDD, they tend to be detailed, complex, and computationally difficult to solve, and thus may not provide any insight into tactical SDD design variables and their impact on the average performance of the system. We propose a simplified vehicle dispatching model that captures the "average" behavior of an SDD system from a single stocking location by utilizing continuous approximation techniques. We analyze the structure of optimal vehicle dispatching policies given our model for two important instance families, the single-vehicle case and the case in which the delivery fleet is large, and develop techniques for finding best configurations of these policies that require only simple computations. We then demonstrate with several example problem settings how this model and these policies can help answer various tactical design questions, including how to select a fleet size, determine an order cutoff time, and combine SDD and overnight order delivery operations. We also validate the predictions of the model and policies for example problem instances against a detailed operational model and demonstrate that our simple approximation model can predict the average number of orders served and minutes driven to within about 1%.

Keywords: same-day delivery, e-commerce, tactical design

Category 1: Applications -- OR and Management Sciences

Category 2: Applications -- OR and Management Sciences (Transportation )

Citation: H. Milton Stewart School of Industrial and Systems Engineering, June 2019

Download: [PDF]

Entry Submitted: 06/07/2019
Entry Accepted: 06/08/2019
Entry Last Modified: 06/07/2019

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