IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v294y2021i2p590-603.html
   My bibliography  Save this article

Integrated express shipment service network design with customer choice and endogenous delivery time restrictions

Author

Listed:
  • Martin, Florian
  • Hemmelmayr, Vera C.
  • Wakolbinger, Tina

Abstract

Express parcel carriers offer a wide range of guaranteed delivery times in order to separate customers who value quick delivery from those that are less time but more price sensitive. To reflect the additional complexity this segmentation adds to the task of optimizing the logistics operations, we present a new model that accounts for the interplay between pricing of due times, customer decisions and the associated restrictions in the distribution process. This profit-maximizing express shipment service network design problem is solved by a heuristic solution approach that simultaneously determines the ideal set of offered delivery times, the associated pricing scheme and the load plan in order to maximize profit. High-quality solutions for realistically-sized instances are derived by a genetic-algorithm-based heuristic that exploits information of previously evaluated iterations. Using this new integrated approach, we provide insight on the potential benefit of an integrated model over sequential optimization of revenue and delivery cost. We also investigate the impact of tighter delivery due times on resource requirements and whether more granular service segmentation can be considered a profitable strategy in multimodal express parcel delivery networks.

Suggested Citation

  • Martin, Florian & Hemmelmayr, Vera C. & Wakolbinger, Tina, 2021. "Integrated express shipment service network design with customer choice and endogenous delivery time restrictions," European Journal of Operational Research, Elsevier, vol. 294(2), pages 590-603.
    • Handle: RePEc:eee:ejores:v:294:y:2021:i:2:p:590-603
    DOI: 10.1016/j.ejor.2021.02.014
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221721000928
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2021.02.014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Christine Tawfik & Sabine Limbourg, 2019. "A Bilevel Model for Network Design and Pricing Based on a Level-of-Service Assessment," Transportation Science, INFORMS, vol. 53(6), pages 1609-1626, November.
    2. Lin, Cheng-Chang & Lin, Dung-Ying & Young, Melanie M., 2009. "Price planning for time-definite less-than-truckload freight services," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(4), pages 525-537, July.
    3. Gregory Dobson & Shlomo Kalish, 1988. "Positioning and Pricing a Product Line," Marketing Science, INFORMS, vol. 7(2), pages 107-125.
    4. Luce Brotcorne & Martine Labbé & Patrice Marcotte & Gilles Savard, 2008. "Joint Design and Pricing on a Network," Operations Research, INFORMS, vol. 56(5), pages 1104-1115, October.
    5. Wu, Tai-Hsi, 1997. "A note on a global approach for general 0-1 fractional programming," European Journal of Operational Research, Elsevier, vol. 101(1), pages 220-223, August.
    6. Teypaz, Nicolas & Schrenk, Susann & Cung, Van-Dat, 2010. "A decomposition scheme for large-scale Service Network Design with asset management," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(1), pages 156-170, January.
    7. Kalyan Talluri & Garrett van Ryzin, 2004. "Revenue Management Under a General Discrete Choice Model of Consumer Behavior," Management Science, INFORMS, vol. 50(1), pages 15-33, January.
    8. Jardar Andersen & Marielle Christiansen & Teodor Gabriel Crainic & Roar Grønhaug, 2011. "Branch and Price for Service Network Design with Asset Management Constraints," Transportation Science, INFORMS, vol. 45(1), pages 33-49, February.
    9. Christine Tawfik & Sabine Limbourg, 2018. "Pricing Problems in Intermodal Freight Transport: Research Overview and Prospects," Sustainability, MDPI, vol. 10(9), pages 1-22, September.
    10. Crainic, Teodor Gabriel & Laporte, Gilbert, 1997. "Planning models for freight transportation," European Journal of Operational Research, Elsevier, vol. 97(3), pages 409-438, March.
    11. Richard D. McBride & Fred S. Zufryden, 1988. "An Integer Programming Approach to the Optimal Product Line Selection Problem," Marketing Science, INFORMS, vol. 7(2), pages 126-140.
    12. Quesada Pérez, José Miguel & Lange, Jean-Charles & Tancrez, Jean-Sébastien, 2018. "A multi-hub Express Shipment Service Network Design model with flexible hub assignment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 120(C), pages 116-131.
    13. Li Li & Sridhar Tayur, 2005. "Medium-Term Pricing and Operations Planning in Intermodal Transportation," Transportation Science, INFORMS, vol. 39(1), pages 73-86, February.
    14. José Miguel Quesada Perez & Jean-Charles Lange & Jean-Sébastien Tancrez, 2018. "A multi-hub express shipment service network design model with flexible hub assignment," LIDAM Reprints CORE 3029, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    15. Smilowitz, Karen R. & Atamtürk, Alper & Daganzo, Carlos F., 2003. "Deferred item and vehicle routing within integrated networks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 39(4), pages 305-323, July.
    16. Crainic, Teodor Gabriel, 2000. "Service network design in freight transportation," European Journal of Operational Research, Elsevier, vol. 122(2), pages 272-288, April.
    17. Andrew P. Armacost & Cynthia Barnhart & Keith A. Ware, 2002. "Composite Variable Formulations for Express Shipment Service Network Design," Transportation Science, INFORMS, vol. 36(1), pages 1-20, February.
    18. Steven Berry & Ariel Pakes, 2007. "The Pure Characteristics Demand Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(4), pages 1193-1225, November.
    19. Gregory Dobson & Shlomo Kalish, 1993. "Heuristics for Pricing and Positioning a Product-Line Using Conjoint and Cost Data," Management Science, INFORMS, vol. 39(2), pages 160-175, February.
    20. Hein Fleuren & Chris Goossens & Marco Hendriks & Marie-Christine Lombard & Ineke Meuffels & John Poppelaars, 2013. "Supply Chain–Wide Optimization at TNT Express," Interfaces, INFORMS, vol. 43(1), pages 5-20, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Siqiao & Zhu, Xiaoning & Shang, Pan & Li, Tianqi & Liu, Wenqian, 2023. "Optimizing a shared freight and passenger high-speed railway system: A multi-commodity flow formulation with Benders decomposition solution approach," Transportation Research Part B: Methodological, Elsevier, vol. 172(C), pages 1-31.
    2. Xuan Xu & Yifan Huang & Bo Hu & Chentao Li & Kenan Gong, 2024. "Identifying Key Barriers to Green Transition Development in China’s Express Industry Based on the Fuzzy DEMATEL Method," Sustainability, MDPI, vol. 16(14), pages 1-26, July.
    3. Xin Li & Peng Zhang, 2022. "Patterns and Influencing Factors of Express Outlets in China," Sustainability, MDPI, vol. 14(13), pages 1-14, July.
    4. Xudong Diao & Ai Gao & Xin Jin & Hui Chen, 2022. "A Layer-Based Relaxation Approach for Service Network Design," Sustainability, MDPI, vol. 14(20), pages 1-13, October.
    5. Satici, Ozgur & Dayarian, Iman, 2024. "Tactical and operational planning of express intra-city package services," Omega, Elsevier, vol. 122(C).
    6. Wang, Zhenjie & Zhang, Dezhi & Tavasszy, Lóránt & Fazi, Stefano, 2023. "Integrated multimodal freight service network design and pricing with a competing service integrator and heterogeneous shipper classes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Zhenjie & Zhang, Dezhi & Tavasszy, Lóránt & Fazi, Stefano, 2023. "Integrated multimodal freight service network design and pricing with a competing service integrator and heterogeneous shipper classes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    2. Xin Wang & Teodor Gabriel Crainic & Stein W. Wallace, 2019. "Stochastic Network Design for Planning Scheduled Transportation Services: The Value of Deterministic Solutions," INFORMS Journal on Computing, INFORMS, vol. 31(1), pages 153-170, February.
    3. Tawfik, Christine & Gendron, Bernard & Limbourg, Sabine, 2022. "An iterative two-stage heuristic algorithm for a bilevel service network design and pricing model," European Journal of Operational Research, Elsevier, vol. 300(2), pages 512-526.
    4. Wang, Zujian & Qi, Mingyao, 2019. "Service network design considering multiple types of services," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 1-14.
    5. Bilegan, Ioana C. & Crainic, Teodor Gabriel & Wang, Yunfei, 2022. "Scheduled service network design with revenue management considerations and an intermodal barge transportation illustration," European Journal of Operational Research, Elsevier, vol. 300(1), pages 164-177.
    6. Bechler, Georg & Steinhardt, Claudius & Mackert, Jochen & Klein, Robert, 2021. "Product line optimization in the presence of preferences for compromise alternatives," European Journal of Operational Research, Elsevier, vol. 288(3), pages 902-917.
    7. Christine Tawfik & Sabine Limbourg, 2019. "A Bilevel Model for Network Design and Pricing Based on a Level-of-Service Assessment," Transportation Science, INFORMS, vol. 53(6), pages 1609-1626, November.
    8. Yıldız, Barış & Savelsbergh, Martin, 2022. "Optimizing package express operations in China," European Journal of Operational Research, Elsevier, vol. 300(1), pages 320-335.
    9. Mervat Chouman & Teodor Gabriel Crainic, 2015. "Cutting-Plane Matheuristic for Service Network Design with Design-Balanced Requirements," Transportation Science, INFORMS, vol. 49(1), pages 99-113, February.
    10. Andrade, Xavier & Guimarães, Luís & Figueira, Gonçalo, 2021. "Product line selection of fast-moving consumer goods," Omega, Elsevier, vol. 102(C).
    11. Hongmin Li & Scott Webster & Gwangjae Yu, 2020. "Product Design Under Multinomial Logit Choices: Optimization of Quality and Prices in an Evolving Product Line," Manufacturing & Service Operations Management, INFORMS, vol. 22(5), pages 1011-1025, September.
    12. Li, Siqiao & Zhu, Xiaoning & Shang, Pan & Li, Tianqi & Liu, Wenqian, 2023. "Optimizing a shared freight and passenger high-speed railway system: A multi-commodity flow formulation with Benders decomposition solution approach," Transportation Research Part B: Methodological, Elsevier, vol. 172(C), pages 1-31.
    13. Juan José Miranda Bront & Isabel Méndez-Díaz & Gustavo Vulcano, 2009. "A Column Generation Algorithm for Choice-Based Network Revenue Management," Operations Research, INFORMS, vol. 57(3), pages 769-784, June.
    14. Wang, Zujian & Qi, Mingyao & Cheng, Chun & Zhang, Canrong, 2019. "A hybrid algorithm for large-scale service network design considering a heterogeneous fleet," European Journal of Operational Research, Elsevier, vol. 276(2), pages 483-494.
    15. Quesada Pérez, José Miguel & Lange, Jean-Charles & Tancrez, Jean-Sébastien, 2018. "A multi-hub Express Shipment Service Network Design model with flexible hub assignment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 120(C), pages 116-131.
    16. Michael Berliner Pedersen & Teodor Gabriel Crainic & Oli B. G. Madsen, 2009. "Models and Tabu Search Metaheuristics for Service Network Design with Asset-Balance Requirements," Transportation Science, INFORMS, vol. 43(2), pages 158-177, May.
    17. Winfried Steiner & Harald Hruschka, 2002. "A Probabilistic One-Step Approach to the Optimal Product Line Design Problem Using Conjoint and Cost Data," Review of Marketing Science Working Papers 1-4-1003, Berkeley Electronic Press.
    18. Wilhelm, Wilbert E. & Xu, Kaihong, 2002. "Prescribing product upgrades, prices and production levels over time in a stochastic environment," European Journal of Operational Research, Elsevier, vol. 138(3), pages 601-621, May.
    19. Daria Dzyabura & Srikanth Jagabathula, 2018. "Offline Assortment Optimization in the Presence of an Online Channel," Management Science, INFORMS, vol. 64(6), pages 2767-2786, June.
    20. C S Sung & S H Song, 2003. "Integrated service network design for a cross-docking supply chain network," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(12), pages 1283-1295, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:294:y:2021:i:2:p:590-603. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.