Adaptive incentive mechanism with predictors for on-time attended home delivery problem

Abstract

The widespread use of the Internet and smart devices has led to a fast growth in online shopping, offering new chances for online retailers to boost profits. However, this expansion has also brought various challenges, such as the heavy workload faced by delivery riders. To meet customers’ delivery time preferences and increase earnings, riders often work long hours, especially during busy periods. This study explores how historical delivery data can be used to balance workload in on-time attended home delivery. Drawing on the actual delivery operations and data of an online shopping platform, we propose a framework that combines delivery demand and customer behavior predictors with an adaptive incentive system to balance rider workload. Specifically focusing on same-day attended home delivery, we introduce a method to forecast future delivery demand, an algorithm to estimate customer choice behavior using a simple model, and an adaptive incentive system to influence customer decisions and achieve workload balance. We show that as order volume increases, the proposed incentive system achieves the pre-determined workload target. Using real data, we conduct numerical experiments which not only underscore the superior predictive performance of our models but also affirm the efficacy of the proposed incentive structure.