The Robust Optimization Approach for the Community Group Purchase Joint Order Fulfillment and Delivery Problem

Abstract

Due to the community lockdown caused by COVID-19, people are turning to a new retail method called “Community group purchase” to obtain daily consumer goods. Orders from the entire community are aggregated and sent to the retailer. To reduce orders' turnover time, the retailer needs to decide what time to fulfill and deliver these orders, which have different information from the distribution center. This paper studies a joint order fulfillment and delivery problem and proposes an integer programming model. Due to the uncertain order information, the robust optimization approach is introduced to formulate two uncertain models based on different uncertainty sets. Through a series of formulations, the robust models are transformed to the tractable form that can be solved directly by the solver. The numerical experiments are carried out to show the benefits of the two robust optimization models, and managerial insights related to the problem are also presented.