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An approximate dynamic programming approach to attended home delivery management

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  • Yang, Xinan
  • Strauss, Arne K.

Abstract

We propose a new method of controlling demand through delivery time slot pricing in attended home delivery management with a focus on developing an approach suitable for industry-scale implementation. To this end, we exploit a relatively simple yet effective way of approximating delivery costs by decomposing the overall delivery problem into a collection of smaller, area-specific problems. These cost estimations serve as inputs into an approximate dynamic programming method that provides estimates of the opportunity cost associated with having a customer from a specific area book delivery in a specific time slot. These estimates depend on the area and on the delivery time slot under consideration.

Suggested Citation

  • Yang, Xinan & Strauss, Arne K., 2017. "An approximate dynamic programming approach to attended home delivery management," European Journal of Operational Research, Elsevier, vol. 263(3), pages 935-945.
    • Handle: RePEc:eee:ejores:v:263:y:2017:i:3:p:935-945
    DOI: 10.1016/j.ejor.2017.06.034
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    References listed on IDEAS

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