Integration of order picking and vehicle routing in a B2C e-commerce context

Abstract

E-commerce sales are increasing every year and customers who buy goods on the Internet have high service level expectations. In order to meet these expectations, a company's logistics operations need to be performed carefully. Optimizing only internal warehouse processes will often lead to suboptimal solutions. The interrelationship between the order picking process and the delivery process should not be ignored. Therefore, in this study, an order picking problem and a vehicle routing problem with time windows and release dates are solved simultaneously using a single optimization framework. To the best of our knowledge, it is the first time that an order picking problem and a vehicle routing problem are integrated. A mixed integer linear programming formulation for this integrated order picking-vehicle routing problem (OP-VRP) is provided. The integrated OP-VRP is solved for small instances and the results are compared to these of an uncoordinated approach. Computational experiments show that integration can lead to cost savings of 14% on average. Furthermore, higher service levels can be offered by allowing customers to request their orders later and still get delivered within the same time windows.

The value of integrating order picking and vehicle routing decisions in a B2C e-commerce environment

“…In Section 8, the value of integration is examined. In general, similar findings can be noticed for large-size instances compared to these in Moons et al (2018) for small-size instances. Service level can be improved and total operational cost can be decreased by integrating both problems.…”

“…Recently, the first studies on an I-OP-VRP have been published by Moons et al (2018) and Schubert, Scholz, and Wäscher (2018). Moons et al (2018) examine an I-OP-VRP in a B2C e-commerce context. A MIP formulation for an I-OP-VRP with time windows to minimise the sum of the order picking and delivery costs is presented.…”

“…Comparing an uncoordinated and integrated approach for small-size instances with up to 20 customer orders indicates that integration can result in higher service levels and cost savings of 14% on average. The problem considered in this paper is the same as the one of Moons et al (2018), except for the objective function. The objective is still to minimise total costs, but a more realistic assessment of these costs is made: routing costs are composed of both distance-and time-based components (instead of only time), and waiting times of vehicles at the start of a route are no longer penalised.…”

“…To obtain more efficient schedules, the order picking and delivery decisions need to be taken simultaneously. Such an integrated approach will lead to better solutions than when solving both problems separately and sequentially (Moons et al 2018).…”

“…Production and warehousing activities have many concepts in common as stated in Moons et al (2018). Nevertheless, differences occur between these two problems.…”