Location flexibility in parcel delivery operations: framework and empirical analysis

Abstract

In traditional parcel delivery operations, customers determine delivery locations and, hence, the performance of a transporter. We exploit this idea and show that customers can improve the efficiency of a transporter by giving the latter flexibility in choosing the delivery locations. Two possible policies to enable this flexibility are presented and evaluated. The first policy, conceptually similar to roaming vehicle routing, is related to the presence of alternative locations. The second policy is related to the possibility of aggregating/skipping some locations. We show that route optimization behind both policies can be modelled via the well-known generalized travelling salesman problem. Extensive computational experiments with real parcel delivery data are performed to evaluate the potential of the presented policies and to obtain insights for possible implementation in daily practice. The experiments show that under certain conditions, the two proposed policies can lead to 15 to 20% improvement in the route length and in extreme yet realistic cases up to 40 to 50%. Consequently, the concept of flexible delivery locations has potential for practice, especially in densely populated areas.