Does size really matter? Dual distribution channel with vans and autonomous delivery devices

Abstract

E-commerce sales worldwide are expected to skyrocket in future years, increasing freight traffic in cities. In this context, sidewalk autonomous delivery devices (ADDs) show great potentialities to decrease carriers’ last-mile operation costs. Nevertheless, the implementation of these autonomous robots requires some adjustments in the supply chain because of their particular characteristics. To avoid severe accidents with pedestrians, their speed and size will be limited and, as a consequence, ADDs seem more adapted to the delivery of small items. The objective of this paper is to estimate the carrier’s total operation costs in a dual delivery channel. If its size is lower than a given threshold, the parcel is delivered to the customer through a supply chain compound of a logistics micro-hub and ADDs. Otherwise, if the parcel is bigger than the given threshold, it is delivered through a business-as-usual supply chain with delivery vans. The carrier’s total operation costs is the sum of the costs induced by the two distribution channels. Assuming that the parcel size follows a known probability distribution function, the carrier’s total operation costs are estimated using the continuous approximation methodology. Different probability distribution functions modelling the size of the parcels are studied in the paper. Finally, the dual distribution channel is optimized considering the size threshold as a decision variable of the system.