An Optimization Approach to the Ordering Phase of an Attended Home Delivery Service

Abstract

Attended Home Delivery (AHD) systems are used whenever a supplying company offers online shopping services which require that customers must be present when their deliveries arrive. Therefore, the supplying company and the customer must both agree on a time window, which ideally is rather short, during which delivery is guaranteed. Typically, a capacitated Vehicle Routing Problem with Time Windows forms the underlying optimization problem of the AHD system. In this work we consider an AHD system that runs the online grocery shopping service of an international grocery retailer.

The ordering phase, during which customers place their orders through the web service, is the computationally most challenging part of the AHD system. The delivery schedule must be build dynamically as new orders are placed. We propose a solution approach that allows to determine which delivery time windows can be offered to potential customers. We split the computations of the ordering phase into four key steps. For performing these basic steps we suggest both a heuristic approach and a hybrid approach employing Mixed-Integer Linear Programs. In an experimental evaluation we demonstrate the efficiency of our approaches.