Pricing for multi-modal pickup and delivery problems with heterogeneous users

Abstract

In this paper, we study the pickup and delivery problem with multiple transportation modalities, and address the challenge of efficiently allocating transportation resources while price matching users with their desired delivery modes. More precisely, we consider that orders are demanded by a heterogeneous population of users with varying trade-offs between price and latency. To capture how prices affect the behavior of heterogeneous selfish users choosing between multiple delivery modes, we construct a congestion game taking place over a form of star network, where each source–sink pair is composed of parallel links connecting users with their preferred delivery method. Using the unique geometry of this network, we prove that one can set prices explicitly to induce any desired network flow, i.e, given a desired allocation strategy, we have a closed-form solution for the delivery prices. We conclude by performing a case study on a meal delivery problem with multiple courier modalities using data from real world instances.