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An Auction Bidding Approach to Balance Performance Bonuses in Vehicle Routing Problems with Time Windows

Author

Listed:
  • Chen-Yang Cheng

    (Department of Industrial Engineering and Management, National Taipei University of Technology, Taipei 10608, Taiwan)

  • Kuo-Ching Ying

    (Department of Industrial Engineering and Management, National Taipei University of Technology, Taipei 10608, Taiwan)

  • Chung-Cheng Lu

    (Department of Transportation and Logistics Management, National Yang Ming Chiao Tung University, Hsinchu 30010, Taiwan)

  • Chumpol Yuangyai

    (Department of Industrial Engineering, School of Engineering, King Mongkut’s Institute of Technology Ladkrabang, Bangkok 10520, Thailand)

  • Wan-Chen Chiang

    (Department of Industrial Engineering and Management, National Taipei University of Technology, Taipei 10608, Taiwan)

Abstract

In the field of operations research, the vehicle routing problem with time windows (VRPTW) has been widely studied because it is extensively used in practical applications. Real-life situations discussed in the relevant research include time windows and vehicle capabilities. Among the constraints in a VRPTW, the practical consideration of the fairness of drivers’ performance bonuses has seldom been discussed in the literature. However, the shortest routes and balanced performance bonuses for all sales drivers are usually in conflict. To balance the bonuses awarded to all drivers, an auction bidding approach was developed to address this practical consideration. The fairness of performance bonuses was considered in the proposed mathematical model. The nearest urgent candidate heuristic used in the auction bidding approach determined the auction price of the sales drivers. The proposed algorithm both achieved a performance bonus balance and planned the shortest route for each driver. To evaluate the performance of the auction bidding approach, several test instances were generated based on VRPTW benchmark data instances. This study also involved sensitivity and scenario analyses to assess the effect of the algorithm’s parameters on the solutions. The results show that the proposed approach efficiently obtained the optimal routes and satisfied the practical concerns in the VRPTW.

Suggested Citation

  • Chen-Yang Cheng & Kuo-Ching Ying & Chung-Cheng Lu & Chumpol Yuangyai & Wan-Chen Chiang, 2021. "An Auction Bidding Approach to Balance Performance Bonuses in Vehicle Routing Problems with Time Windows," Sustainability, MDPI, vol. 13(16), pages 1-16, August.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:16:p:9430-:d:619585
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    References listed on IDEAS

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    1. Matteo Salani & Maria Battarra & Luca Maria Gambardella, 2016. "Exact Algorithms for the Vehicle Routing Problem with Soft Time Windows," Operations Research Proceedings, in: Marco Lübbecke & Arie Koster & Peter Letmathe & Reinhard Madlener & Britta Peis & Grit Walther (ed.), Operations Research Proceedings 2014, edition 1, pages 481-486, Springer.
    2. Mes, Martijn & van der Heijden, Matthieu & van Harten, Aart, 2007. "Comparison of agent-based scheduling to look-ahead heuristics for real-time transportation problems," European Journal of Operational Research, Elsevier, vol. 181(1), pages 59-75, August.
    3. Gerald Senarclens de Grancy & Marc Reimann, 2015. "Evaluating two new heuristics for constructing customer clusters in a VRPTW with multiple service workers," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 23(2), pages 479-500, June.
    4. Marius M. Solomon, 1987. "Algorithms for the Vehicle Routing and Scheduling Problems with Time Window Constraints," Operations Research, INFORMS, vol. 35(2), pages 254-265, April.
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