Incentive Schemes for Attended Home Delivery Services

Many companies using attended home delivery services have found the delivery schedule to be a major logistic challenge. Customers choosing their time windows pose major restrictions on the delivery schedule, as the time windows are often small and customers near each other might choose different windows. In this paper, we therefore studied the use of incentives to influence customers to choose a time window more convenient for the planning of the delivery schedule. Because the future orders are unknown to a vendor, the time windows a customer might select are too. Therefore, we also analysed cases of incorrect estimates of customer behaviour. We used simulation to evaluate the proposed methods for distribution of the incentives. While we found flat incentives to influence the profit positively, incentives based on more sophisticated methods create a larger improvement. Furthermore, if the customers’ behaviour is unknown, the extra profit which can be made, will decrease if the vendor is unable to estimate the behavior correctly. However, offering incentives will still be of use if the vendor makes a partially correct estimate.