The role of individual compensation and acceptance decisions in crowdsourced delivery

Abstract

High demand, rising customer expectations, and government regulations are forcing companies to increase the efficiency and sustainability of urban (last-mile) distribution. Consequently, several new delivery concepts have been proposed that increase flexibility for customers and other stakeholders. One of these innovations is crowdsourced delivery, where deliveries are made by occasional drivers who wish to utilize their surplus resources (unused transport capacity) by making deliveries in exchange for some compensation. The potential benefits of crowdsourced delivery include reduced delivery costs and increased flexibility (by scaling delivery capacity up and down as needed). The use of occasional drivers poses new challenges because (unlike traditional couriers) neither their availability nor their behavior in accepting delivery offers is certain. The relationship between the compensation offered to occasional drivers and the probability that they will accept a task has been largely neglected in the scientific literature. Therefore, we consider a setting in which compensation-dependent acceptance probabilities are explicitly considered in the process of assigning delivery tasks to occasional drivers. We propose a mixed-integer nonlinear model that minimizes the expected delivery costs while identifying optimal assignments of tasks to a mix of professional and occasional drivers and their compensation. We propose an exact two-stage solution algorithm that allows to decompose compensation and assignment decisions for generic acceptance probability functions and show that the runtime of this algorithm is polynomial under mild conditions. Finally, we also study a more general case of the considered problem setting, show that it is NP-hard and propose an approximate linearization scheme of our mixed-integer nonlinear model. The results of our computational study show clear advantages of our new approach over existing ones. They also indicate that these advantages remain in dynamic settings when tasks and drivers are revealed over time and in which case our method constitutes a fast, yet powerful heuristic.