Look-ahead strategies for dynamic pickup and delivery problems

Abstract

In this paper we consider a dynamic full truckload pickup and delivery problem with time-windows. Jobs arrive over time and are offered in a second-price auction. Individual vehicles bid on these jobs and maintain a schedule of the jobs they have won. We propose a pricing and scheduling strategy based on dynamic programming where not only the direct costs of a job insertion are taken into account, but also the impact on future opportunities. Simulation is used to evaluate the benefits of pricing opportunities compared to simple pricing strategies in various market settings. Numerical results show that the proposed approach provides high quality solutions, in terms of profits, capacity utilization, and delivery reliability. © The Author(s) 2008.